India imports crude oil worth nearly $50 bn in Q1FY27, 40% of FY26 total crude import bill

New Delhi: India's crude oil import bill surged to nearly $50 billion in the June quarter, a 60% jump from a year earlier, as the war in West Asia ended discounts that once cushioned the country's energy costs.

The world's third-largest oil importer paid $49.8 billion for crude in the April-June period, government data showed, even as the volume of oil bought fell to around 60 million tonnes from 62.6 million tonnes a year ago. The gap between rising costs and falling volumes underscores how much of the increase is being driven by price rather than demand.

Brent crude touched a five-week high of $90 per barrel on Monday, adding pressure on an import bill that already represents 40% of India's FY26 oil purchases. "Along with increase in oil prices in general, the fact that most of the discounts that major buyers like India were getting prior to the war were also done away with during most of April-June," said Madan Sabnavis, chief economist at Bank of Baroda.

A weakening rupee, down 14 paise to 96.44 against the dollar on Monday, is compounding the pressure, while a new threat has emerged: Yemen's Houthi militia said it would close the Bab el-Mandeb Strait to Saudi Arabia, jeopardizing a Red Sea route India has been using as an alternative to the Strait of Hormuz.

Russia still dominant, but discounts have shrunk

So far in July, Venezuela is the fourth largest supplier of oil to India with 342,819 barrels per day of oil exports. Russia continues to be the largest supplier to India, with exports of 2.6 million barrels, according to data from the maritime and commodities-tracking firm Kpler. In April-May, as major supply sources dried up with the closure of the Strait of Hormuz, Russia charged a premium on oil sales, compared to the discounts it had been offering in the past four years. Currently, it is offering discounts, though of a smaller amount, around $4 per barrel.

The weakening of the rupee also added to the widening import bill. On Monday, the rupee depreciated 14 paise to 96.44 against the US dollar, on risk aversion in global markets and a surge in crude oil prices.

As crude prices continue their upward trend, the import bill is expected to increase in the months ahead. Prices had eased after the signing of the memorandum of understanding (MoU), however, after the resumption of the war between Iran, and the US and Israel, the prices have returned to the northward trajectory.

Sabnavis said that although prices may not cross the $ 90-per-barrel mark, they are expected to average around $75-85 this fiscal, which is still higher than prices in the same period last fiscal.

The Indian crude oil basket, which represents the cost of crude procured by Indian refiners, was at $83.06 per barrel on Friday.

Houthi militia targets Saudi supply route

In a major development which may further squeeze global oil supplies, Yemen's Houthi militia announced the closure of the Bab el-Mandeb Strait to Saudi Arabia.

This move is set to affect oil supplies from Saudi Arabia via the Red Sea. Mint earlier reported that India has been importing oil from Yanbu Port in Saudi Arabia on the Red Sea as an alternative to the Strait of Hormuz.

Supply disruptions and the eventual increase in oil prices have a major impact on India, as it imports about 90% of its total oil requirement. An increase of $1 per barrel may lead to an increase of ₹18,000 crore in the country's total import bill.

C. Uday Bhaskar, director, Society for Policy Studies, said, "Every $1 increase in the average annual crude price adds $1.5–2 billion to India’s annual oil import bill. If this oil spike continues for an extended period, the adverse impact on the trade deficit and CAD (current account deficit) will also kick in."

"India will have to evolve a deft policy that combines diplomacy with market alertness & long term partnerships with other oil producers. Multiple challenges and a heads-up, that Delhi will have to re-envision its major power relations, particularly with a Trump-led USA,” he added.

Last week, data released by the ministry of statistics and programme implementation showed that India’s retail inflation surpassed the Reserve Bank of India’s 4% midpoint target for the first time since January 2025 and accelerated to 4.38% in June.