New Delhi: Crude oil prices breaching the $100 per barrel threshold is the equivalent of midflight turbulence to the global economy. For India, heavily dependent on oil imports, the dynamics are vastly different due to exchange rate dynamics.
Crude oil is almost always paid for in dollars, unless traded with countries like Iran or Russia facing US economic sanctions. This means actual prices for the Indian economy, in rupee terms, can be drastically different.
A long-term analysis of data shows that crude in March 2026 and March 2022 is not very different in $ terms, but the ₹ price is very different.
The INR-USD exchange rate movement affects the domestic currency price of Brent crude, resulting in a 23.6% difference between the two periods.
Retail transmission of fuel prices looks different when compared with crude prices in $ or ₹ terms, impacting government finances and refinery margins.
The retail price of petrol in Delhi shows that retail prices had not come down as much as crude prices until the current war broke out, while the latter shows that even though crude prices had been falling, retail prices were still lower in proportional terms.
