As the US-Iran conflict resurgences again, prices for Brent crude oil are moving toward USD 100 per barrel for the first time since July 2026. The surge has been worrying as to what if the oil prices increase again at the global level and put a strain on Indian budgets again with fuel, cooking, transportation etc.
But economists suspect that people will not be getting a significant increase in the price of petrol and diesel as soon as they fill up at the pump. The effect on the Wholesale Price Index is likely to be immediate, taking it up to 10%, said Post chairman Madan Sabnavis, Chief Economist at Bank of Baroda. The government could take a wait-and-see stance before imposing the new costs on the people, he added, noting that already retail inflation is also on the rise.
The higher prices are also likely to come from “commercial gas” and “aviation turbine fuels” (ATF), Sabnavis said, but the details and timing of those increases remains to be seen. How much of the rise the companies pass on will result in a more muted effect on the inflation of the Consumer Price Index.
International energy prices are already having an impact on commercial LPG/CNG, and that government action is now keeping petrol/diesel annual inflation under check, said Sanchita Mukherji, Senior Business Economist and Managing Partner of Talk The Walk LLP. These pressures may slowly permeate into the households, such as through rising costs for eating out, city gas, freight and car fares.
Indiana’s price of crude basket has seen a steady increase to USD 102 in September from USD 90 in August from USD 82-83 in June and July, said Ajay Bagga, a global commentator. He believes prices of gasoline and diesel would not be rising any time soon, but some industries like chemicals, paints and tyres may see a rise in input prices and margins.
The government will closely watch crude prices for now, and the sustainability of the $100-plus pricing level will be pivotal for the government’s next determination.