New Delhi [India], July 23 (ANI): With Brent crude hovering near USD 100 per barrel, experts have raised concerns over its impact on India's inflation, current account deficit (CAD) and foreign exchange reserves, though they believe a sustained rally above the USD 100 mark is unlikely.

According to the Reserve Bank of India's (RBI) latest bulletin, India's crude oil basket price eased sharply to USD 75.6 per barrel in July from a peak of USD 114.5 per barrel in April.

India, one of the world's largest crude oil importers, remains vulnerable to higher global crude prices as they increase the country's import bill and put pressure on the rupee and the current account deficit.

Sourav Choudhary, Managing Director, Raghunath Capital, said, 'For India, the immediate concern is obvious. As one of the world's largest crude oil importers, a higher oil price increases the country's import bill, puts pressure on the current account deficit, and weighs on the rupee due to higher dollar outflows. However, the overall impact is likely to remain manageable in the near term because India has successfully diversified its sourcing and continues to procure significant volumes of crude at discounted prices from multiple suppliers.'

At the time of reporting, Brent crude was trading at around USD 98.08 per barrel, while WTI crude was at around USD 89.63 per barrel.

Choudhary added, 'Brent crude may briefly cross the USD 100 per barrel mark if geopolitical tensions and supply-side uncertainties intensify. However, I do not expect prices to sustain above this level for a prolonged period.'

He said global oil producers are competing aggressively for market share, with several exporting nations continuing to offer crude at discounts to Brent, which should help cap any sustained rally.

According to him, the market is currently pricing in geopolitical risks rather than a structural supply deficit, making a prolonged period of Brent trading well above USD 100 per barrel unlikely.

Highlighting the risks of persistently high oil prices, Choudhary said, 'The real challenge would emerge only if Brent remains above USD 100 per barrel for an extended period. In such a scenario, the pressure on India's foreign exchange reserves and inflation would become more pronounced.'

'The government may initially absorb a part of the increase through fiscal measures, but prolonged elevated prices would eventually require a pass-through to retail fuel prices, resulting in higher transportation costs and broader inflationary pressures across the economy,' he added.

Market and banking expert Ajay Bagga said India is facing a situation similar to March 2026, with rising crude oil prices weighing on the macroeconomic outlook.

'European Central Bank (ECB) meets today and is expected to be on hold despite oil and gas prices increasing inflation expectations,' he noted.

The RBI bulletin also highlighted the divergence between international crude prices and domestic retail fuel prices. It said retail prices of petrol and diesel remained unchanged in July 2026 at Rs 108.7 per litre and Rs 98.1 per litre, respectively, compared with June.

'Retail prices of petrol and diesel remained unchanged in July. Domestic household LPG prices also remained steady in July,' the central bank said. (ANI)