India’s crude oil procurement landscape has undergone a sharp shift in March, as escalating geopolitical tensions in West Asia disrupted nearly 20 percent of global energy supply and pushed benchmark prices significantly higher. According to data from the Petroleum Planning and Analysis Cell (PPAC), the average price at which Indian refiners sourced crude surged to $136.56 per barrel as of March 13, marking a steep 93 percent rise from levels seen at the end of February when the conflict began.

This surge is already reflecting in the broader Indian crude basket, which averaged $104.78 per barrel so far in March compared to $69 per barrel in February. Benchmark Brent crude hovered near $102 per barrel on March 17, indicating that elevated price levels are not transient but sustained amid ongoing supply-side disruptions.

The situation is further complicated by policy decisions at the domestic level. Despite rising crude costs, the government has indicated that retail prices of petrol and diesel are unlikely to be increased in the near term to shield consumers. This pricing rigidity is now translating into financial stress for oil marketing companies (OMCs), as input costs rise while realizations remain capped.

More details on crude pricing trends can be understood through official PPAC releases available via government energy dashboards and related disclosures.

Analysts note that marketing margins for OMCs have already turned negative. According to ICRA, crude prices in the range of $100–105 per barrel would result in losses of Rs 11 per litre on petrol and Rs 14 per litre on diesel. This would also translate into LPG under-recoveries of around Rs 40,000 crore. If prices escalate further to $120–125 per barrel, the pressure intensifies sharply, with projected LPG losses rising to Rs 70,000 crore and deeper negative margins on auto fuels.

At the core of this evolving dynamic is a structural shift in sourcing patterns. Indian refiners have significantly ramped up purchases of Russian crude, particularly as traditional Middle Eastern supply routes face disruptions, including the closure of the Strait of Hormuz. Kpler data indicates that imports of Russian oil have risen to 1.6 million barrels per day, a 45 percent jump from January–February levels.

However, the economics of Russian crude are also changing. Once available at steep discounts of $10–13 per barrel to Brent, Russian Urals are now trading at a premium of $4–5 per barrel. Data from Argus Media shows that Urals crude delivered to India’s west coast reached $98.93 per barrel, the highest level since the onset of the Russia-Ukraine conflict in 2022.

This reversal in pricing dynamics follows a recent policy move by the United States, which issued a 30-day licence allowing countries to purchase Russian oil cargoes already at sea. While the move aims to stabilise global supply chains, it has inadvertently increased competition for available Russian barrels, pushing prices higher.

Indian refiners are responding aggressively to secure supply, with around 20 million barrels of Russian crude already in the country and an additional 25–30 million barrels expected by month-end. This surge in procurement reflects both supply constraints elsewhere and the need to hedge against further price volatility.

From a macroeconomic standpoint, India’s crude import bill remains elevated but somewhat contained so far, standing at $100.4 billion during April–January FY26 compared to $114.1 billion in the previous year. However, the recent spike in prices suggests that the import bill trajectory could reverse if elevated crude levels persist.

The implications extend beyond OMC balance sheets. ICRA has flagged that sustained high crude prices could exert pressure on broader corporate profitability, particularly in sectors where fuel is a key input cost. This, in turn, may have second-order effects on government revenues, including corporate tax collections and dividend inflows from state-run oil companies.