India, the world’s third-largest crude importer, depends on imports for nearly 85-90% of its oil requirements.
India’s oil marketing companies have absorbed losses of close to Rs 1,000 crore a day, with under-recoveries running to nearly Rs 2 lakh crore in Q1 ’26. (Photo: AI-generated)
As Brent crude continues to hover above USD 100 per barrel amid the escalating West Asia conflict, Indian households may soon feel the impact in their monthly budgets through higher inflation, expensive loans and rising day-to-day costs.
India, the world’s third-largest crude importer, depends on imports for nearly 85-90% of its oil requirements. As a result, any sustained spike in global crude prices quickly filters down to consumers — from petrol pumps and grocery stores to restaurants and transport costs.
Fuel Prices Under Pressure
Despite the prolonged US-Israel-Iran conflict, fuel prices in India have remained unchanged for nearly two months. This has largely been possible because the Centre absorbed a significant financial burden by cutting excise duties, while oil marketing companies have absorbed losses of close to Rs 1,000 crore a day.
Although the government has urged citizens not to panic-buy fuel, speculation over an imminent petrol and diesel price hike has intensified. The buzz gained further traction after Prime Minister Narendra Modi appealed to people to minimise the use of petrol and diesel, opt for work from home and use electric vehicles.
What It Means For Your EMI
The crude oil surge could also hit borrowers directly. Rising oil prices typically push inflation higher, forcing the Reserve Bank of India to maintain elevated interest rates or delay rate cuts.
For salaried households with home, vehicle or personal loans, this could translate into higher EMIs for a longer period. Even a modest 0.25% to 0.50% increase in interest rates can significantly raise monthly repayments on large loans such as a Rs 50 lakh home loan.
Floating-rate vehicle and personal loans could feel the impact almost immediately.
Higher fuel and input costs are also expected to put pressure on companies, potentially slowing salary hikes, delaying hiring, or triggering cost-cutting measures — making loan repayment more difficult for many families.
Analysts warn that if crude prices continue to average above USD 100 through the year, the RBI may prioritise inflation control over economic growth, keeping borrowing costs elevated for an extended period.
Grocery Bills Set To Rise
The impact of expensive crude oil is not limited to petrol pumps. Higher oil prices directly increase transportation and logistics costs, especially because diesel powers most of India’s trucking and supply chain network.
As freight costs rise, transporting vegetables from agricultural hubs to urban markets, milk from Gujarat, and packaged goods across states becomes more expensive. The burden eventually reaches consumers in the form of higher grocery bills.
Economists expect prices of vegetables, fruits, rice, pulses and edible oils to rise further if crude remains elevated. Food inflation — already a politically and economically sensitive issue — could move well above the RBI’s comfort zone in the coming months.
There could also be indirect pressure through rising fertiliser costs, which may increase farm production expenses and push retail prices even higher later this year.
For middle-class households spending around Rs 8,000-10,000 a month on groceries, even a 5-8% rise in prices could add an extra burden of Rs 500-1,000 every month.
What Happens To Your Salary?
The oil shock may also impact salaries, hiring and job stability indirectly as higher energy costs slow economic growth. Analysts warn that persistently high crude prices could shave off 0.5-0.8 percentage points from India’s GDP growth projections. Sectors heavily dependent on fuel and transportation — including manufacturing, aviation, logistics, automobiles and small businesses — are likely to face rising operational costs.
At the same time, a weakening rupee could make imports more expensive, squeezing corporate profit margins and forcing companies to rethink bonuses, salary increments and hiring plans.
For employees, this may not result in an immediate salary cut, but slower appraisals, delayed hiring and tighter corporate spending could become increasingly visible if the oil shock continues.
There are also concerns that remittances from Gulf countries may moderate if regional economies face prolonged instability, affecting thousands of Indian families dependent on overseas income.
Read More
