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Crude oil prices likely to soften faster in 2026: SBI Research report

06 Jan 2026 Evaluate

The SBI Research report has said that crude oil prices are likely to soften faster in 2026, and this will relatively average the CPI inflation decisively below 3.4 per cent for fiscal year 2026-27 (FY27). It noted that crude oil prices could touch $50/barrel by June 2026. It further said that benign energy prices will impact the Gross Domestic Product (GDP) outlook favourably, and added that the expected impact on annual GDP growth is around 10-15 bps.

It highlighted that the medium-term trends since 2022 for Brent and Indian basket show that there has been a downward trend in crude prices. It pointed out that the latest event in Venezuela has not impacted the price significantly on the upside. Brent crude price has been hovering around $60 per barrel for the last one week. It said since oil prices constitute the largest component in the import basket and cannot be substituted with domestic production in the short term, contraction of the import bill on account of crude import prices will impact the rupee.

It said analysis, using recent history, suggests that assuming USD/INR base price of Rs 90.28, the 14 per cent expected correction may result in 3 per cent appreciation in the rupee, which is approximately Rs 87.5 per dollar, and a part of this could play out in Q4 FY26. Meanwhile, the US Energy Information Administration estimates that the Brent crude oil price will fall to an average of $55 per barrel in the first quarter of 2026, largely driven by the buildup of inventory.


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