Crude Oil Prices Set for Significant Decline by 2026

Crude oil prices are anticipated to drop to USD 50/barrel by June 2026, potentially reducing CPI inflation below 3.4 percent for FY27. Declining energy costs are expected to positively impact GDP growth by 10-15 bps. Falling prices will influence the rupee and induce a price correction by Q4 FY26.

Crude oil prices are projected to decline to USD 50 per barrel by June 2026, according to an SBI Research report released Monday. The report indicates that the rapid decline in prices will likely reduce CPI inflation to below 3.4 percent for fiscal year 2027.

The anticipated drop in energy prices is expected to positively influence GDP, contributing to an annual growth increase of around 10-15 basis points. The report highlights a consistent downward trend in crude oil prices since 2022, which has notably not been impacted by recent developments in Venezuela.

The report further suggests the potential impact on India's rupee, with a crude price correction tied to a possible 3 percent appreciation against the US dollar by the final quarter of fiscal year 2026.

(With inputs from agencies.)