India oil trade deficit: Crisil warns of FY27 jump

Why the oil trade gap is back in focus

India’s oil trade deficit is expected to widen sharply in FY27, with higher crude prices and weakening petroleum exports set to test the country’s external balances, according to a Crisil report titled Oil’s not well. The warning comes at a time when India’s reliance on imported crude remains structurally high, making the trade balance sensitive to shifts in global energy prices and shipping conditions. Crisil’s assessment also points to a change in how the oil trade deficit behaves relative to crude prices. In earlier periods, lower crude prices typically helped narrow the deficit. In the last two fiscals, Crisil said that relationship has weakened as import volumes continued rising while refined product exports failed to keep pace.

What Crisil’s report said

Crisil said India meets more than 85% of its annual crude oil requirement through imports, a long-standing dependence that keeps the crude trade deficit “under the pump” historically. The report highlighted that import volumes have risen steadily over the past decade-plus, while exports have been comparatively range-bound. It also noted that the oil trade deficit has started widening again after moderating during periods when crude prices were lower. The report flagged FY24 onward as the period when pressure intensified. That was driven by declining exports of refined petroleum products for two straight fiscals, even as imports climbed.

Import dependence remains the key structural risk

The most important takeaway from Crisil’s note is that India’s oil vulnerability is not only about price. It is also about volumes and the limited ability of petroleum exports to offset the import bill. With more than 85% of crude oil requirements met through imports, any sustained rise in Brent prices translates quickly into higher import costs. Even when prices soften, a higher volume of imports can keep the deficit elevated. This is one reason Crisil described the recent widening as a break from the past trend.

Imports have climbed from FY14 to FY26

Crisil’s data shows a steady jump in India’s oil imports from nearly 190 million tonnes in FY14 to well above 300 million tonnes in FY26. Over the same period, exports stayed broadly range-bound. The report did not indicate a similar step-up in export volumes that could counter the import growth. This mismatch matters because it increases the probability of a wider oil trade deficit even in periods when global crude benchmarks are not rising. It also raises the baseline level of India’s oil-linked outflows.

Refined product exports have not kept pace

Crisil said refined petroleum product exports have largely remained flat over the years, with one exception being a temporary spike after the Covid-19 pandemic. The report added that pressure on the oil trade deficit intensified from FY24, when refined product exports declined for two straight fiscals. This came even as imports continued to rise, widening the deficit in dollar terms. Crisil specifically noted that the deficit rose despite crude prices trending down during that period, reinforcing its point that the historical linkage had weakened.

FY27 crude price outlook and CAD forecast

Crisil expects Brent crude prices to average USD 90-95 per barrel in FY27. That is significantly higher than the average of USD 70.3 per barrel recorded in the previous fiscal, as cited in the report excerpts. Against this backdrop, Crisil forecasts India’s current account deficit (CAD) to widen to 2.2% in the current fiscal, up from an estimated 0.8% last fiscal. Crisil also flagged a second potential pressure point: remittances from West Asia, where any slowdown could add to external-balance stress.

Other published estimates add context

Other estimates cited alongside the Crisil discussion show a broad range for FY27 CAD outcomes depending on crude prices and external conditions. HSBC Global Research warned the CAD could widen to 2.3% of GDP in FY27 from around 0.9% in FY26, and also estimated a balance of payments deficit of nearly USD 65 billion next fiscal if pressures persist. HSBC expects India’s oil and gas import bill to rise to nearly USD 226 billion in FY27 from around USD 174 billion in FY26, assuming Brent averages around USD 95 per barrel. Separately, a Crisil scenario framework also referenced a base case of USD 75-80 per barrel with CAD at 1.5% of GDP in FY27, and an alternate case of USD 82-87 per barrel where CAD could rise to 2.0%.

What the trade data is already indicating

Beyond forecasts, near-term trade numbers underscore pressure on the merchandise deficit. One cited data point showed India’s merchandise trade deficit widened to USD 28.4 billion in April 2026, up from USD 27.1 billion a year ago and USD 20.7 billion in March. While this is not an oil-only measure, it aligns with the broader concern that a higher energy bill can amplify the overall trade gap. Crisil also described oil as the biggest source of the goods trade deficit, pegged at 36% in FY26.

Market impact: why equities and currency watchers track this closely

A wider oil trade deficit can influence market expectations around the rupee and external financing needs, especially when crude prices rise faster than export earnings. For equity investors, the issue often shows up through concerns about macro stability, import-driven inflation risks, and the policy trade-offs that follow. The Crisil report’s key market signal is that higher crude prices and weak petroleum exports may widen the CAD even if services trade surplus remains supportive. And because India’s crude import dependence is structurally high, markets tend to treat sustained oil shocks as a recurring macro variable rather than a one-off event.

Key numbers from the reports

Conclusion: what to watch next

Crisil’s central message is that India’s oil trade deficit risks widening in FY27 because import volumes remain high, petroleum exports are weakening, and Brent prices are expected to average USD 90-95 per barrel. The forecast CAD widening to 2.2% from an estimated 0.8% adds a macro lens for investors tracking the rupee, trade data, and policy responses. The next signposts will be monthly trade prints, Brent price trends, and whether refined product exports stabilise after two fiscals of declines.