FALLING OIL PRICES, STABLE RUPEE TO BOOST GROWTH

Crude oil prices for the Indian basket saw a sharp rise from $63.40 per barrel in April 2021 to $116.01 in June 2022

- BY PRINCE TYAGI

CRUDE OIL PRICES HAVE significantly cooled off since the 2022 peak due to stabilising supply chains and weakening global demand. According to data from the Petroleum Planning and Analysis Cell, crude oil prices for the Indian basket saw a sharp rise from $63.40 per barrel in April 2021 to $116.01 in June 2022, driven by global supply disruptions.

However, prices declined steadily through 2023 and into 2024. By May 14, 2025, the price dropped to $63.47, nearly matching the level seen four years earlier. The drop could help reduce India's import bill, as it still depends heavily on imported crude oil to meet its energy needs. In FY24-25, India spent around $185.7 billion on crude oil and petroleum product imports, according to the CMIE Economic Outlook.

The crude oil bill accounts for nearly 26% of India's total imports, which stood at $720 billion for FY25. The dependence on imported crude oil makes the Indian economy vulnerable to changes in global crude oil prices and changes in the exchange rate between the Indian rupee and the US dollar. When oil prices rise or the rupee weakens against the dollar, India's imports become more expensive. This puts pressure on the country's trade balance and increases inflation. On the other hand, lower crude oil prices and a stronger rupee reduce the trade deficit, control inflation, and provide more room for government spending on development.

In the last year, global crude prices have dropped significantly, Data from investing.com shows Brent crude futures prices have declined from $83.3 per barrel on May 15, 2024, to $64.53 on May 15, 2025. Meanwhile, the rupee, although weaker compared to last year, has shown signs of recovery, moving from ₹87.63 in February 2025 to around ₹85.58 currently.