Oil prices slip below $60, offering India a fresh tailwind

Oil prices have slipped below $60 a barrel, offering a fresh tailwind to an Indian economy already growing above 8% with near-zero inflation.

International benchmark Brent fell below $59 on Tuesday amid rising supplies, signs of a weakening Chinese economy, and optimism over a Ukraine peace deal. Prices edged up on Wednesday to trade around $60 after US President Donald Trump ordered a blockade of all sanctioned oil tankers moving in and out of Venezuela, escalating tensions with the country, which accounts for roughly 1% of global oil supply.


"Any disruption to Venezuelan supply affects only a limited group of buyers, and the global market remains sufficiently supplied to absorb potential shortfalls arising from the US actions," said Muyu Xu, senior crude oil analyst at Kpler. Venezuela exports about 765,000 barrels per day, with 76% bound for China.

Cheaper crude will further ease India's import bill, which has already fallen 13% year-on-year in April-October to $81.9 billion. Lower prices will also help refiners offset the drag from a weaker rupee, which has depreciated 7% since May to above ₹90 to a dollar.

Pump prices-long aligned with the election calendar-are unlikely to be cut quickly, said an industry executive, adding that the chances of a reduction rise ahead of assembly polls in Assam, West Bengal, Tamil Nadu and Kerala, which begin in March.

The last nationwide fuel price cut was in March 2024, ahead of the general elections. Since then, domestic pump prices for both petrol and diesel have remained nearly unchanged, even as international prices, to which they are linked, have fallen 18-19% for the two fuels. Frozen retail prices, combined with lower crude costs, are showing up in higher refining profits.

State-run fuel retailers Indian Oil, BPCL and HPCL reported a 457% year-on-year jump in combined profit in the July-September quarter to ₹17,882 crore. These profits could strengthen further if the government avoids hiking fuel duties to capture the windfall. The Centre raised excise duty on petrol and diesel by ₹2 per litre in April, a move that could generate additional revenue of around ₹32,000 crore a year.