India's Oil Trade Deficit May Widen Sharply In FY27: CRISIL

(MENAFN- KNN India) New Delhi, May 20 (KNN) India's oil trade deficit is expected to widen sharply in FY27 due to rising crude oil prices, weakening petroleum exports, and the country's continued dependence on imported crude, according to a report by CRISIL.

In its report titled 'Oil's not well', CRISIL said India remains heavily reliant on overseas crude supplies, with more than 85 percent of its annual crude oil requirement met through imports.

The report highlighted that India's crude oil imports have steadily increased from nearly 190 million tonnes in FY14 to over 300 million tonnes in FY26, while petroleum exports have remained relatively stagnant over the same period.

As a result, the country's oil trade deficit has started widening again after briefly moderating during periods of lower crude prices, reported ANI.

Rising Crude Prices, Weak Exports Add Pressure

According to the report, the pressure on the oil trade deficit intensified from FY24 onwards as exports of refined petroleum products declined for two consecutive years even while crude imports continued to rise.

“Consequently, the oil trade deficit in dollar terms rose, despite crude oil prices trending down in that period,” CRISIL noted, adding that this marked a break from the earlier trend when lower crude prices typically helped narrow the deficit.

The report further warned that the situation may worsen in FY27, with Brent crude prices expected to average between USD 90-95 per barrel, significantly higher than the USD 70.3 per barrel average recorded in the previous fiscal.

Current Account Deficit Seen Widening

CRISIL also projected India's current account deficit (CAD) to widen to 2.2 percent in FY27 from an estimated 0.8 percent in FY26.

“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 percent this fiscal,” the report stated.

The report underlined that rising energy costs, combined with geopolitical tensions in West Asia and slowing petroleum exports, could increase pressure on India's external balances in the coming months.

(KNN Bureau)

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