India has reworked its crude oil basket in the middle of a price shock that pushed import costs to $156.29 per barrel on March 19, with prices easing to $121.15 per barrel by March 27 following a change in basket composition, even as the reported March average stands at $111.93 per barrel.
The rejig by the Petroleum Planning and Analysis Cell (PPAC) marks a shift in how India tracks crude prices, aligning the benchmark with current sourcing patterns as refiners diversify procurement amid global supply disruptions.
The revision captures the change in India’s crude sourcing pattern, with the basket now reweighted to 61.02% Brent-linked sweet crude and 38.98% Oman-Dubai sour crude, compared with the earlier 78.71% sour and 21.29% sweet crude mix, marking a structural shift in how the country’s oil import costs are measured and understood.
The Indian crude basket is not a traded benchmark but a derived price, calculated as a weighted average of Brent Dated (sweet crude) and the Oman-Dubai average (sour crude) based on the actual import mix. In simple terms, the basket price = (Brent price × share of Brent-linked crude) + (Oman-Dubai price × share of sour crude).
Refiners alter sourcing
As refiners alter sourcing — such as increasing intake of Brent-linked barrels — the weights shift, making the basket a dynamic reflection of India’s current import cost rather than a static global reference.
The impact of the rejig is two-fold. First, it makes the basket more representative of current procurement realities as refiners move away from a traditionally Middle East-heavy crude slate. Second, it moderates the headline monthly average during a period of extreme volatility, without reducing the actual cost burden on the economy.
“The Indian crude basket is designed to reflect the evolving sourcing pattern of imports and provide a representative benchmark of the price paid by refiners,” an official said.
The need for recalibration
The need for recalibration arose as the earlier Oman-Dubai-heavy structure had begun to reflect past import dependence rather than present procurement trends. With supply disruptions around the Strait of Hormuz which accounts for nearly 27% of global seaborne oil trade and about 20% of global oil and gas flows — refiners widened sourcing beyond the Gulf, increasing intake of Brent-linked crude.
India has significantly diversified its crude sourcing in March 2026, with Russian imports rising by around 50% to nearly 1.5 million barrels per day, alongside higher procurement from other regions to offset Middle East supply disruptions. This has reduced reliance on the conflict-prone Strait of Hormuz, with nearly 75% of supplies now routed through alternative channels.
This shift has raised the share of sweet crude in India’s import basket, making the revised composition more aligned with the crude slate currently being processed.
The change comes after a steep climb in India’s crude basket, which rose from $70.90 per barrel on February 26 to $127.20 on March 12, $136.56 on March 13 and $142.69 on March 16, before touching $146.09 on March 17 and peaking at $156.29 on March 19.
While prices have since moderated to $121.15 per barrel as of March 27, they remain significantly elevated compared to February levels.
For India, which imports over 85% of its crude oil requirement, such price levels continue to exert pressure on the import bill, inflation and the current account deficit.
Industry estimates suggest that every $1 per barrel increase in crude prices raises India’s annual import bill by about ₹10,000–12,000 crore, underscoring the macroeconomic impact.
A PPAC official said the revision improves the representativeness of the benchmark but does not ease the economic burden. “The basket now better reflects the actual crude mix, but the price shock continues to flow through the economy via higher import costs,” the person added.
The shift also signals a structural change in India’s energy strategy, with a rising share of Brent-linked crude pointing to diversification away from a Middle East-centric supply base.
While this improves supply resilience, it also exposes India to a broader range of global price dynamics.
The recalibrated basket, therefore, reflects current import realities more accurately, but even as prices ease from peak levels, the underlying cost pressure remains firmly in place.