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RBI Sets $85 Oil Price Benchmark for FY26 After US-Iran Ceasefire Cools Market

The Reserve Bank of India has set its crude oil price assumption at $85 per barrel for the 2025-26 financial year, with a further drop to $75 projected for 2027-28. This forecast follows a temporary ceasefire between the United States and Iran, which has already caused a significant drop in oil prices from recent highs near $120 per barrel. RBI Governor Sanjay Malhotra shared the estimates while announcing the Monetary Policy Committee's decision to keep the repo rate unchanged. The central bank projects Consumer Price Index inflation at 4.6% for the full year, with quarterly fluctuations expected.

Key Points: RBI Oil Price Forecast: $85 for FY26, $75 for FY27 Post Ceasefire

  • RBI sets $85 oil benchmark for FY26
  • Forecast eases to $75 for FY27
  • Ceasefire cools prices from $120 peak
  • CPI inflation projected at 4.6%
  • Repo rate held steady at 5.25%
2 min read

RBI sets $85 oil benchmark for FY26, $75 for FY27 after US-Iran ceasefire eases prices

RBI Governor projects $85/barrel oil for FY26, easing to $75 for FY27 after US-Iran ceasefire lowers prices. CPI inflation forecast at 4.6%.

"Oil prices tumbled today... after a conditional two-week ceasefire between the US and Iran - Kaynat Chainwala"

Mumbai, April 8

The Reserve Bank of India on Wednesday said it has assumed an average crude oil price of $85 per barrel for FY 2025-26, in line with its CPI inflation projection of 4.6 per cent.

RBI Governor Sanjay Malhotra shared the estimate during a press conference after the Monetary Policy Committee decided to keep the repo rate unchanged at 5.25 per cent. He added that the crude oil price assumption for FY 2027-28 is $75 per barrel.

The projection follows the announcement of a temporary ceasefire between the United States and Iran. During the month-long conflict in West Asia, crude oil prices had surged to nearly $120 per barrel. As of 0130 IST, Brent crude was trading over 13 per cent lower at $94.68 per barrel. The ceasefire includes reopening the Strait of Hormuz for commercial shipping, with transit fees allowed for Iran and Oman.

"Oil prices tumbled today, with WTI and Brent falling below $96 per barrel after a conditional two-week ceasefire between the US and Iran," said Kaynat Chainwala, AVP, Commodity Research at Kotak Securities.

On inflation, Malhotra said headline inflation remained below target at 2.7 per cent in January and 3.7 per cent in February. Fuel inflation stayed moderate. For the full year, CPI inflation is projected at 4.6 per cent.

"Headline inflation for January and February stayed below the target at 2.7 per cent and 3.7 per cent, respectively...Inflation in fuel terms remained modest during this period. For the full year, the Consumer Price Index inflation is projected at 4.6 per cent," noted the RBI Governor.

The central bank expects inflation to be 4 per cent in the first quarter and 4.4 per cent in the second quarter. It may rise to 5.2 per cent in the third quarter before easing to 4.7 per cent in the fourth quarter.

The Governor cautioned that high energy and commodity prices could affect growth, as rising crude oil prices may push inflation higher.

- ANI

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Reader Comments

R
Rohit P
Good news, but I'll believe it when I see it reflected at the petrol pump. Often, global prices fall but the benefit to consumers is delayed or reduced by taxes. The government should ensure full pass-through of this price drop.
A
Aditya G
The Strait of Hormuz reopening is the key takeaway here. Nearly a third of the world's seaborne oil passes through it. This ceasefire, even if temporary, removes a major supply chain choke point. Our strategic reserves and import planning must account for such geopolitical shocks.
S
Sarah B
While the lower price assumption is positive, the RBI's caution about Q3 inflation rising to 5.2% is concerning. That's above the target band. It shows they are being realistic—monsoon performance and food prices will be critical in that period.
K
Karthik V
A two-week ceasefire is just a pause, not a permanent solution. Basing FY27 projections on $75 seems optimistic. Our economic planning needs more resilience and less dependence on volatile West Asian politics. Time to double down on renewables and electric vehicles. ⚡
M
Meera T
This should help keep interest rates stable for a bit longer. As someone looking to take a home loan next year, that's a relief. Stable oil prices mean the RBI might not have to hike rates aggressively to control inflation.

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