India, which imports more than 80% of its crude oil, will benefit from another price fall in oil. India's Chief Economic Advisor believes that a rebound in supply followed by a price reduction would be a welcome economic boost.
Oil prices fell substantially following a decision by the OPEC+ bloc, led by Russia and Saudi Arabia, to increase output by 411,000 barrels per day starting from June 2025. The decision is made just weeks before a visit by U.S. former president Donald Trump to the Middle East.
The global benchmark Brent Crude fell by as much as 4.6% on the first day of the week to about \\$58 a barrel, while West Texas Intermediate (WTI) was around \\$56 on May 5. Brent Crude is now near the four-year low it hit in April 2025.
For India, this fall in oil prices is considered a relief. It would ease the economic strain caused by a series of global uncertainties. "Although one does worry about the first, second, and third-round impacts of U.S. tariffs, particularly on the demand from the rest of the world, there is a greater level of uncertainty impacting the process of capital formation. It is that the unstated pursuit of lower prices of oil at \$50 or even lower" was addressed by V. Anantha Nageswaran, Chief Economic Advisor to India, on May 4, 2025.
India's crude basket in April 2025 averaged \\$67.73 a barrel. As of May 1, 2025, it had declined to \\$61.89. For reductions beyond that, increases in supply are predicted, assuming everything else remains equal. Speculation is also made that oil supply is raised above that which was announced.
The increase in supply is partly driven by two factors. One, the most powerful member of OPEC+, Saudi Arabia, has accused Kazakhstan and Iraq of consistently overproducing their quotas. Two, there is external pressure, particularly from the U.S., spearheaded by Trump, to keep oil prices low.
Price forecasts vary:
- Morgan Stanley predicts prices to stabilize at \\$62.5 per barrel by the fourth quarter of 2025.
- Goldman Sachs estimates the average price of \\$60 per barrel for the remainder of 2025, but has previously indicated that prices could even fall to a low of \\$40 per barrel in a worst-case scenario.
For India, which depends so heavily on crude oil imports, falling oil prices would be a huge windfall. But in the aftermath of the recent OPEC action, projected prices still hover well above the $50 per barrel level that India is anticipating.
India News Today:
Indian economy at present remains glued to the trend of prices of oil around the globe, with the country hoping to broker good deals on behalf of both consumers and industry. The administration is closely observing the situation and stands prepared to capitalize on whatever shift there could be in world oil production so that prices locally could be stabilised.
Sectoral Impact
The falling price of oil will not percolate across all sectors to the same degree. Airlines such as IndiGo and SpiceJet, and paint manufacturers such as Asian Paints and Berger will benefit from reduced fuel and raw material prices. Oil producers such as ONGC and Oil India, on the other hand, will lose heavily from revenues of ₹300 crore to ₹400 crore annually for every $1 per barrel drop in crude oil prices.
As India News Today depicts, the political and economic situation is changing, and such action in global markets can have extensive consequences for the future of the country. With lower oil prices, India's trade deficit may be improved, providing much-needed relief to its economy.
Briefly, while the falling oil prices are a chance for India to reduce its import bill, the best price level for the country is still at \\$50 per barrel, as highlighted in India News Today.