Indian crude oil basket hits $128.70, highest since April: Impact on stocks, sectors, RBI policy
Data showed Indian crude oil basket stood at $128.70 at last count, almost double from $67.16 on July 2, even as it is off $157.04 level on March 23.
- Sep 15, 2026,
- Updated Sep 15, 2026 1:16 PM IST
With the Indian crude oil basket hitting $128.80 a barrel, its highest level since April 2026, its impact on select stocks and sectors is likely to be felt, especially as retail inflation hit an eight-month high of 4.8 per cent in August and bets rise on a 25 basis points (bps) RBI rate hike in October.
Equities market has started to increasingly fret about high crude oil prices, given the continued blockade of the Strait of Hormuz (SOH), recent escalation in the Middle East conflict that may further disrupt global oil supplies and declining global oil inventories, Kotak Institutional Equities said in a note.
India could be at the receiving end.
Rising Indian crude basket & inflation Data showed Indian crude oil basket stood at $128.70 at last count, almost double from $67.16 on July 2, even as it is off $157.04 level on March 23. MOFSL said the immediate impact on inflation may be limited if domestic fuel prices are not fully adjusted, but the indirect effects can be more meaningful.
"Higher crude prices feed into transportation, logistics, chemicals, plastics, synthetic fibres and other intermediate goods, while also increasing input costs across the manufacturing and services sectors. The key risk is therefore not simply the direct fuel component of CPI, but second-round pass-through from higher energy and producer prices," it said.
Stocks, sector-wise impact The immediate market reaction would be risk-off, Manoranjan Sharma, Chief Economist at Infomerics Ratings said on rising oil prices.
The hit is largest in aviation sector, where jet fuel is roughly a third to 40 per cent of operating costs at the recent price levels, followed by paints, tyres and petrochemicals, where crude-linked inputs form a large share of the raw material bill and margins compress quickly, said Rajeev Sharan, Head of Research, Brickwork Ratings, said in a note.
Logistics, cement and parts of FMCG feel it through freight and packaging, while oil marketing companies (OMCs) are squeezed when they cannot fully pass costs to the pump. Upstream producers, by contrast, gain from stronger realisations, Sharan said.
For an economy importing over 85 per cent of its crude, estimates suggest every $10 a barrel adds about $13-14 billion to the yearly import bill and can lift retail inflation by 30 to 50 basis points.
From a credit view, "a brief spike is usually absorbed; the real risk is oil staying elevated from here, which would pressure margins in exposed sectors, with smaller, leveraged firms feeling it first," Sharan said.
To recall RBI research earlier estimated that a $10-per-barrel oil-price increase can add roughly 49 basis points to headline inflation. If the government decides to absorb the shock, it could add 43 basis points to the fiscal deficit.
"This causes difficult policy trade-off. Passing through the increase in petrol, diesel and LPG prices raises transport, food and manufactured-goods costs, suppressing household real incomes and consumption. Absorbing it through excise cuts or fuel subsidies protects inflation temporarily but strains fiscal arithmetic and the oil marketing companies," Manoranjan Sharma, Chief Economist at Infomerics Ratings.
Sharma said higher crude compresses margins for airlines, paints, chemicals, logistics, cement, consumer companies and downstream oil marketers if retail prices remain controlled.
It can also delay earnings recovery, raise bond yields, weaken the rupee and prompt foreign portfolio outflows—reducing valuation multiples, Sharma said.
Selective producers, such as ONGC and Oil India, however, gain from higher realisations; refiners may benefit only if product cracks and pricing freedom offset cost pressure. Renewable-energy, electric-mobility and domestic gas themes may attract longer-term interest, Sharma said.
RBI rate hike
HSBC said inflation is likely to jump in September, and average above 5 per cent for nine consecutive months, adding that it expects RBI to hike policy rates by 25 bps each in October and December. MOFSL sees a meaningful possibility of an RBI rate hike in October. It does not expects the RBI to wait for the broadening of inflationary pressures to become fully visible in Q3 data.
"Given the lag in monetary transmission, the RBI may prefer to act preemptively if crude remains elevated and inflation expectations begin to move higher," MOFSL said.
Systematic said household wage and income growth are already muted and a sustained inflation is risking accentuating stagflationary pressures in the economy.
"Interim Q1 FY27 results from manufacturing companies illustrate this divergence: sales growth for the sector stood at 25.6 per cent year-on-year (based on a CMIE compilation of over 1700 companies), while raw material costs surged 40 per cent year-on-year, driven largely by a roughly 50 per cent rise in average crude prices alongside broader input cost inflation," it said.
"As a result, value addition (sales less raw material costs) compressed from Rs 5.5 lakh crore to Rs 5.3 lakh crore, a decline of 4.5 per cent year-on-year in nominal terms; RM to sales ratio surged by over 8 percentage points to 75.3 per cent indicating high likelihood of pipeline inflation," it said.
With the Indian crude oil basket hitting $128.80 a barrel, its highest level since April 2026, its impact on select stocks and sectors is likely to be felt, especially as retail inflation hit an eight-month high of 4.8 per cent in August and bets rise on a 25 basis points (bps) RBI rate hike in October.
Equities market has started to increasingly fret about high crude oil prices, given the continued blockade of the Strait of Hormuz (SOH), recent escalation in the Middle East conflict that may further disrupt global oil supplies and declining global oil inventories, Kotak Institutional Equities said in a note.
India could be at the receiving end.
Rising Indian crude basket & inflation Data showed Indian crude oil basket stood at $128.70 at last count, almost double from $67.16 on July 2, even as it is off $157.04 level on March 23. MOFSL said the immediate impact on inflation may be limited if domestic fuel prices are not fully adjusted, but the indirect effects can be more meaningful.
"Higher crude prices feed into transportation, logistics, chemicals, plastics, synthetic fibres and other intermediate goods, while also increasing input costs across the manufacturing and services sectors. The key risk is therefore not simply the direct fuel component of CPI, but second-round pass-through from higher energy and producer prices," it said.
Stocks, sector-wise impact The immediate market reaction would be risk-off, Manoranjan Sharma, Chief Economist at Infomerics Ratings said on rising oil prices.
The hit is largest in aviation sector, where jet fuel is roughly a third to 40 per cent of operating costs at the recent price levels, followed by paints, tyres and petrochemicals, where crude-linked inputs form a large share of the raw material bill and margins compress quickly, said Rajeev Sharan, Head of Research, Brickwork Ratings, said in a note.
Logistics, cement and parts of FMCG feel it through freight and packaging, while oil marketing companies (OMCs) are squeezed when they cannot fully pass costs to the pump. Upstream producers, by contrast, gain from stronger realisations, Sharan said.
For an economy importing over 85 per cent of its crude, estimates suggest every $10 a barrel adds about $13-14 billion to the yearly import bill and can lift retail inflation by 30 to 50 basis points.
From a credit view, "a brief spike is usually absorbed; the real risk is oil staying elevated from here, which would pressure margins in exposed sectors, with smaller, leveraged firms feeling it first," Sharan said.
To recall RBI research earlier estimated that a $10-per-barrel oil-price increase can add roughly 49 basis points to headline inflation. If the government decides to absorb the shock, it could add 43 basis points to the fiscal deficit.
"This causes difficult policy trade-off. Passing through the increase in petrol, diesel and LPG prices raises transport, food and manufactured-goods costs, suppressing household real incomes and consumption. Absorbing it through excise cuts or fuel subsidies protects inflation temporarily but strains fiscal arithmetic and the oil marketing companies," Manoranjan Sharma, Chief Economist at Infomerics Ratings.
Sharma said higher crude compresses margins for airlines, paints, chemicals, logistics, cement, consumer companies and downstream oil marketers if retail prices remain controlled.
It can also delay earnings recovery, raise bond yields, weaken the rupee and prompt foreign portfolio outflows—reducing valuation multiples, Sharma said.
Selective producers, such as ONGC and Oil India, however, gain from higher realisations; refiners may benefit only if product cracks and pricing freedom offset cost pressure. Renewable-energy, electric-mobility and domestic gas themes may attract longer-term interest, Sharma said.
RBI rate hike
HSBC said inflation is likely to jump in September, and average above 5 per cent for nine consecutive months, adding that it expects RBI to hike policy rates by 25 bps each in October and December. MOFSL sees a meaningful possibility of an RBI rate hike in October. It does not expects the RBI to wait for the broadening of inflationary pressures to become fully visible in Q3 data.
"Given the lag in monetary transmission, the RBI may prefer to act preemptively if crude remains elevated and inflation expectations begin to move higher," MOFSL said.
Systematic said household wage and income growth are already muted and a sustained inflation is risking accentuating stagflationary pressures in the economy.
"Interim Q1 FY27 results from manufacturing companies illustrate this divergence: sales growth for the sector stood at 25.6 per cent year-on-year (based on a CMIE compilation of over 1700 companies), while raw material costs surged 40 per cent year-on-year, driven largely by a roughly 50 per cent rise in average crude prices alongside broader input cost inflation," it said.
"As a result, value addition (sales less raw material costs) compressed from Rs 5.5 lakh crore to Rs 5.3 lakh crore, a decline of 4.5 per cent year-on-year in nominal terms; RM to sales ratio surged by over 8 percentage points to 75.3 per cent indicating high likelihood of pipeline inflation," it said.