NEW DELHI, June 14: Crude prices are unlikely to return to pre-Gulf conflict levels of $65 per barrel, according to brokerage firm Prabhudas Lilladher, as geopolitical uncertainty and supply chain disruptions keep oil prices near $92-$95 per barrel in FY27.
The brokerage expects the price shock to widen India’s import bill, inflate subsidies, and put upward pressure on the current account deficit (CAD), even as demand is expected to weaken in the coming months.
“We believe crude prices are unlikely to revert to pre-Gulf conflict levels of USD 65 per barrel. The second-level impact of high crude prices and supply chain disruption is likely to impact demand over the coming months,” Prabhudas Lilladher said in its June 12, 2026, report.
The firm pegged the average oil price for FY27 at $92-$95 per barrel, pushing India’s import bill higher by an estimated $70 billion to around $180 billion for imports of 4.3 million barrels per day.
Higher freight rates and insurance costs will add to landed fuel costs, the brokerage said.
The fiscal impact could be substantial. Fertilizer and input prices have surged, with urea prices up 120 percent and prices of DAP, sulphur, and ammonia rising by 38 percent, 87 percent, and 87 percent, respectively, according to the report.
“This is likely to significantly inflate the budgeted subsidy bill of Rs 1.7 trillion,” Prabhudas Lilladher noted.
Despite the government raising petrol and diesel prices by Rs 8-9 per liter and cutting excise duties, losses on petroleum products persist. Heavy losses on domestic LPG are also expected to put additional pressure on government finances, the report added.
On the external front, the brokerage sees growing stress. The current account deficit is currently estimated at around 2 percent of GDP in FY27, but Prabhudas Lilladher expects “an upward bias given geopolitical uncertainty and sluggish global trade despite recent fiscal and monetary interventions.”
A depreciating rupee, coupled with Rs 3 trillion in foreign institutional investor (FII) outflows, is compounding the strain.
As part of its policy response, the government has imposed restrictions on gold imports following imports of $80 billion in FY26.
Prabhudas Lilladher said there are hopes that “irritants around taxation and regulations regarding FPI investment in both debt and equity markets are being relaxed, which will have positive implications in the long term.”
The brokerage added that the impact of elevated crude prices and disrupted supply chains will become more apparent over the coming months. With oil prices remaining high, the government’s fiscal cushion will depend on how much subsidy and excise revenue it is willing to sacrifice to contain retail fuel prices.
Until geopolitical risks ease, the current account deficit and fiscal arithmetic will remain key concerns for markets and policymakers.
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