Mumbai
The RBI expects the price of the Indian basket of crude oil imports to be around $85 per barrel going ahead amid geopolitical tensions which have imparted significant uncertainty to the outlook.
India exports around 85 per cent of its crude requirement, and soaring oil prices which have often crossed the $90 a barrel mark in recent years, tend to drag down the economy.
The RBI’s monetary policy report released on Friday states that international crude prices exhibited sizeable two-way movements in the second half of 2023-24, falling in October-December 2023 to around $75 per barrel on slowing global demand amidst weak manufacturing activity and easing demand for transportation fuels as well as supply increases from non-OPEC countries.
However, amidst intensifying hostilities in the Middle East, deep output cuts by OPEC plus cartel, and incidents of supply outages, international crude prices moved higher from mid-December reaching an average close to $85 per barrel in March, and the report points out.
The spread between global petroleum product prices and crude prices eased from its recent peaks in mid-2022 but remains elevated by historical standards in view of demand-supply refinery mismatches. Taking into account these factors, the baseline assumption for the crude price (Indian basket) is retained at $85 per barrel, the report states.
Regarding the outlook for the rupee, the report states that the nominal exchange rate of the Indian currency saw two-way movements in the range of Rs 82.8-83.4 per US dollar in the second half of 2023-24.
