According to Crisil forecasts, India's oil trade deficit is expected to reach new highs in FY27, driven by rising Brent crude prices amid the West Asia crisis. The credit rating agency projects Brent crude prices to average $90-95 per barrel in FY27, significantly higher than the $70.3 per barrel recorded in the last fiscal year. This represents a substantial increase from current levels, with Crisil noting that the oil trade deficit is expected to be even higher this fiscal year compared to previous periods. 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. As per Crisil, "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 emphasized that the oil trade deficit in dollar terms rose despite crude oil prices trending down in that period, marking a break from the past when the deficit used to narrow as crude oil prices fell.
As a direct consequence of these compounding external pressures, India's macroeconomic indicators show signs of strain. The report noted that the real gross domestic product (GDP) growth is projected to slow down to 6.6 per cent in fiscal 2027, compared to the 7.6 per cent growth recorded in fiscal 2026. This represents a significant deceleration from previous growth rates, with the spike in international crude, gas and fertilizer prices expected to raise import bills significantly while exports face pressure from global trade disruption and weakening global demand. The agency emphasizes that the current account deficit (CAD) is projected to widen significantly to 2.2 per cent of GDP in fiscal 2027 from an estimated 0.8 per cent in the previous fiscal year. The report estimates that "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."
India's oil trade challenges stem from its heavy import dependency, with the country meeting over 85 per cent of its annual crude oil requirement through imports. According to Crisil data, import volumes have risen 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 import dependency has intensified further, with gross petroleum imports as a percentage of India's gross imports in value terms jumping from 22 per cent in 2024-25 to 40 per cent in 2025-26. This dramatic increase in energy import share highlights the country's growing vulnerability to global oil price volatility, as the report notes that 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 oil trade deficit, which had moderated during periods of lower crude prices in the past, has again started widening, marking a significant break from historical patterns.
Domestic inflation feels the heat of the geopolitical friction, with average consumer price index (CPI) inflation expected to climb sharply to 5.1 per cent in fiscal 2027 from 2.0 per cent in fiscal 2026. This surge is driven by producers passing on elevated energy and transportation costs to consumers. As per Crisil, "While the government has limited rise in retail fuel inflation so far, a persistent rise in global prices could see retail fuel prices for cooking and transportation climb up further. Additionally, a sharp rise in energy and other input costs, as well as those for trade and transportation, is expected to be passed by producers to consumers, raising core inflation." The severe disruption in the energy corridor has forced a major revision in global commodity forecasts, with Crisil Intelligence raising its Brent crude price forecast to $90-95 per barrel for fiscal 2027, up from the earlier projection of $82-87 per barrel. The shock extends beyond energy to freight and insurance costs, supply chains, and fertilizers, creating multidimensional economic pressures.
India's edible oil import dependency has also intensified, with total edible oil imports rising 3 per cent to 166.51 lakh tonnes in FY26, driven largely by duty-free shipments from Nepal. According to the Solvent Extractors' Association of India (SEA), Nepal's edible oil exports to India more than doubled to 7.36 lakh tonnes during the year, compared to 3.45 lakh tonnes in the previous fiscal year - representing a 113 per cent increase. Nepal, which enjoys zero-duty access to Indian markets under the South Asian Free Trade Area (SAFTA) agreement, exported refined soybean oil as the bulk of its exports, with smaller volumes of sunflower oil, RBD Palmolein and rapeseed oil also traded. As per SEA, "The surge in duty-free imports of refined oils from Nepal substantially contributed to the increase in India's total edible oil imports during the year." India remains heavily dependent on overseas supplies, with domestic production meeting only around 40 per cent of total edible oil requirements, constrained by low oilseed yields, fragmented landholdings, limited irrigation and policy tilt toward wheat and rice cultivation.
