• Crude price outlook: Depleted global strategic reserves, low floating inventory, and Strait of Hormuz tensions have driven crude from $95 to $107 per barrel, with potential to touch $120 if tensions persist.
• Supply diversification: India has mitigated supply risks by establishing alternative crude and LPG supply chains from the US, Africa, and Australia, significantly reducing its dependency on the Middle East.
• Refining capacity buffer: While global diesel cracks are at all-time highs due to international refining constraints, India’s strong domestic refining and export capacity shield local consumers from product shortages.
• Retail fuel pricing: The Indian government is unlikely to hike domestic fuel prices unless crude surpasses $120 per barrel, though sustained high prices will test the absorption limits of oil companies and excise duty buffers.
• Price correction dynamics: If geopolitical tensions ease, crude risk premiums will drop immediately, but the overall speed of price decline is expected to be slower than in previous cycles due to exhausted inventory cushions.