The report, titled “Oil’s not well”, underlined that India continues to rely heavily on overseas crude supplies, with more than 85 per cent of its annual crude oil requirement met through imports. “India’s crude oil trade deficit has been under the pump historically because of having to meet over 85% of its annual requirement from imports,” the report said.
Data presented in the report showed India’s oil imports rising steadily from nearly 190 million tonnes in FY14 to well above 300 million tonnes in FY26, while exports remained comparatively range-bound over the same period. The oil trade deficit, which had moderated during periods of lower crude prices in the past, has again started widening.
Also Read: India bonds gain as traders cover shorts after oil-led selloff
According to the report, the increase in import volumes has not been matched by growth in refined petroleum product exports, which have largely remained flat over the years except for a temporary spike following the Covid-19 pandemic. The report noted that pressure on the oil trade deficit intensified from FY24 onward as exports of refined petroleum products declined for two straight fiscals, even while imports continued to rise.
“Consequently, the oil trade deficit in dollar terms rose, despite crude oil prices trending down in that period,” Crisil said, adding that this marked “a break from the past when the deficit used to narrow as crude oil prices fell”.
Also Read: India’s edible oil imports rise 3% in FY26 on Nepal duty-free surge, industry body saysThe report also warned that the situation could worsen further in the current fiscal. Crisil expects Brent crude prices to average between USD 90-95 per barrel in FY27, significantly higher than the average of USD 70.3 per barrel recorded in the previous fiscal. The report estimates India’s current account deficit (CAD) to widen to 2.2 per cent this fiscal.
“With the prospect of oil trade deficit increasing and likely pressure on remittances from West Asia, we forecast India’s current account deficit (CAD) to rise to 2.2% this fiscal from an estimated 0.8% last fiscal,” the report said.