There is a deep connection between the price of crude oil and the economy of India. India imports 85 percent of its requirement. In the international market, if the prices of crude oil rises, its direct effect is seen on the economy of India. Now the biggest question is that if crude oil prices get a 10 percent rise in the international market, then what kind of effect is seen on India? How much inflation increases in India.
Recently a report of RBI has come out. In which this thing has been answered. The report gives information about how the increase in crude oil prices in the international market can harm India’s economy. Let us try to understand this report that how can the price of crude oil to India’s economy harm?
How much can inflation be increased?
Domestic inflation may rise by 0.20 percent if there is a 10 percent increase in global prices of crude oil. A study by experts on the Reserve Bank of India was estimated on Wednesday. Sujatha Kundu, Annemasri Tiwari and Indranil Bhattacharya released a riches paper on the price of oil and inflation in India. In this, policy measures have also been sought to reduce dependence on imported crude oil from methods like alternative non-givash fuel use. However, the Reserve Bank has clarified that this study does not represent its authorized ideas.
Economy damage
According to the study report, it is important to understand in the current context that the bounce in oil prices can have an impact to the Indian economy. It states that the existing Economic Outlook, which is characterized by increasing trade fragmentation, disruption of supply chain and fasting fees, can reduce global trade rapidly and thus derail global growth. In such a situation, instability in oil prices can prove to be weakening the Indian economy at this time.
In this, it has been said that the sudden surge in oil prices can affect the process of falling inflation and policy generalization may also fail. According to the study, empirical analysis shows that India’s core inflation can rise by about 0.20 percent if there is a 10 percent increase in international prices of crude oil.
How much is inflation in India in the present time
Inflation in India has been continuously decreasing for the last few months. In June 2025, CPI inflation in the country has come to 2.11 percent. Which is a lower level of about 7 years. The main reason for the cut in inflation is the fall in crude oil prices and the decrease in food inflation. On the other hand, there is also a lot of inflation. According to experts, if the monsoon is better and there is a cut in crude oil prices, there can be further decrease in inflation in the coming months.
Crude oil prices in India
If we talk about crude oil prices in India, then it has reduced considerably. On Thursday, there is a slight increase in the price of crude oil on the Multi Commodity Exchange. According to the data, crude oil prices are trading at Rs 5697 per barrel every 1 to 55 minutes. Whereas during the business session, the price of crude oil reached the day high with Rs 5729 per barrel. By the way, crude oil prices were opened at Rs 5670 this morning.
Crude oil prices in international market
On the other hand, the price of crude oil is also increasing in the international market. Crude oil of Gulf countries rose by 0.79 per cent to $ 69.05 per barrel. While the price of American crude oil is seen trading at $ 0.90 per barrel. According to the report, the increase in crude oil prices has been seen due to a decline in American tariff and crude oil innovation.