West Asia crisis hits March crude imports, but India ends FY26 on growth path

Driven by higher consumption of petroleum products, India’s crude imports in the 2025-26 fiscal increased by nearly 1% but witnessed a 17% fall in purchases in the month of March due to disruption of trade routes amid the West Asia crisis.According to provisional oil and gas data released by the government, India purchased 245.3 million tonnes (MT) of crude in FY26, up from 243.2 MT in the preceding financial year. Imports in March this year fell to 18.9 MT from 22.8 MT during the corresponding period a year earlier.India’s net oil and gas import bill, however, reduced by over 10% in FY26, from $131.2 billion in the preceding fiscal to $117.5 billion, due to subdued Indian oil basket prices according to provisional data compiled by the Petroleum Planning and Analysis Cell.India imports nearly 90% of its crude requirement and 40% of it came through the Strait of Hormuz, the key energy chokepoint, during the pre-conflict period. As the key maritime route remained disrupted, India diversified its imports and made large quantities of spot purchases from Russia and Iran to plug the supply gap.While the crude processed by Indian refiners in FY26 increased to 272.1 MT, compared with 268.6 MT in FY25, domestic consumption of petroleum products also rose from 239.2 MT to 243.2 MT, respectively. This growth was led by a 3.6% increase in diesel sales, 6.5% in petrol, 6% in LPG, and 2% in aviation turbine fuel consumption.Amid the government’s nudge to consumers to shift from LPG to natural gas for cooking purposes, LNG consumption in March this year witnessed a 7% rise over the same month in the previous fiscal, increasing from 5,386 million standard cubic metres (MMSCM) to 5,737 MMSCM. However, overall consumption in FY26 declined by 2.4% compared with FY25.India’s net oil and gas import bill reduced by over 10% in FY26, from $131.2 billion in the preceding fiscal to $117.5 billion, according to provisional data compiled by the Petroleum Planning and Analysis Cell.Ratings agency ICRA said on Wednesday that oil marketing companies were selling petrol and diesel at a loss of Rs 14 per litre and Rs 18 per litre, respectively, due to higher crude prices squeezing marketing margins. It also estimated domestic LPG under-recoveries at Rs 80,000 crore for FY2027 if the current trend persisted, while projecting the fertiliser subsidy to rise to Rs 2-2.3 trillion for FY2027.“The stable pump prices for auto fuels amid elevated crude oil prices are impacting the profitability of OMCs despite the recent reduction in excise duty. At crude prices of $120-125 a barrel and long-term averages of crack spreads, the marketing margins on petrol and diesel are estimated to be negative Rs 14 a litre and Rs 18 a litre, respectively,” said Prashant Vasisht, Senior Vice President & Co-Group Head, ICRA.