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Oil Prices to Plunge to $50 by 2026, Easing Inflation: SBI Report

A State Bank of India report forecasts a significant decline in global crude oil prices, with Brent crude potentially reaching around $50 per barrel by June 2026. This drop is attributed to rising inventories and softer global demand trends. The Indian crude basket, which closely correlates with Brent, is expected to follow this softening trajectory. The anticipated price correction could exert downward pressure on consumer inflation, potentially pulling average CPI below 3.4% in FY27.

Key Points: Crude Oil Price Forecast: $50 by June 2026, SBI Says

  • Brent crude may fall to ~$50 by June 2026
  • High inventories exerting downward pressure
  • Indian crude basket to follow similar softening trend
  • Expected drop could pull CPI inflation below 3.4%
  • Technical analysis points to further price declines
2 min read

Crude oil prices expected to decline to USD 50 per barrel by June 2026: SBI report

SBI report predicts Brent crude oil falling to ~$50 per barrel by mid-2026, easing India's inflation. Analysis of inventories and price trends.

"Crude oil prices to soften significantly in 2026 (to touch USD 50 /bbl by June 2026) - SBI Report"

New Delhi, January 6

Global crude oil prices are expected to soften significantly in 2026, with Brent crude likely to decline to around USD 50 per barrel by June 2026, according to a report by State Bank of India.

The report highlighted that the overall outlook for crude oil prices in 2026 is weakening further from current levels amid rising inventories and softer global trends.

It stated "Crude oil prices to soften significantly in 2026 (to touch USD 50 /bbl by June 2026".

The report noted that the U.S. Energy Information Administration has estimated that Brent crude oil prices could fall to an average of USD 55 per barrel in the first quarter of 2026. This decline is largely attributed to a buildup of inventories, which is expected to exert downward pressure on prices.

Given the strong linkage between global and domestic crude prices, the report stated that the Indian crude basket, which has a correlation of 0.98 with Brent crude, is also expected to follow a similar softening trend.

As a result, movements in Brent crude prices suggest further easing in the Indian basket in the coming months.

The report also mentioned that a moving average analysis of Indian crude prices indicates that current levels are trending below both the 50-period and 200-period moving averages. This technical trend points to the possibility of lower prices ahead from the current level of USD 62.20 per barrel.

The expected decline in crude prices is also likely to have a favourable impact on India's inflation dynamics.

The report stated that the anticipated fall in the Indian basket price to USD 53.31 per barrel, combined with the dynamic daily pricing mechanism, would be transmitted to fuel prices at retail fuel stations.

The report estimated that a 14 per cent correction in the Indian basket in the fourth quarter of FY26 could exert a downward pressure of around 22 basis points on the CPI basket, assuming a 48 per cent passthrough.

This moderation is expected to pull average CPI inflation for FY27 decisively below 3.4 per cent, providing meaningful relief on the inflation front also.

- ANI

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Reader Comments

R
Rohit P
A report predicting prices for 2026? That's a bit too far out, no? So much can change geopolitically in two years. While I hope it's true, we should treat this as a broad direction, not a guarantee. Let's focus on managing our current inflation.
A
Aditya G
Excellent analysis by SBI. The link to CPI inflation below 3.4% is the real story. This could give RBI room to cut rates, boosting investment and growth. A sustained period of low oil prices is exactly what the Indian economy needs for a strong takeoff.
S
Sarah B
As someone working in the renewable energy sector, I have a respectful criticism. While lower oil prices help inflation, I hope this doesn't slow down India's push for green energy and EVs. We must use this price relief to double down on energy independence through renewables.
K
Karthik V
My father runs a transport business. Even talk of lower prices is a relief. The daily pricing mechanism mentioned means changes should be quick. Fingers crossed this happens! It will improve margins for lakhs of small businesses like ours. 🚛
M
Meera T
Good for the pocket, but let's be practical. The government's tax collection on fuel is massive. Will they reduce excise duty if prices fall, or just pocket the difference again? The report says "transmitted to retail prices," but past experience makes me skeptical.

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