Crude oil at $50 by June 2026? What it could mean for inflation, rupee and growth

Crude oil prices are expected to soften significantly in 2026 and could touch around $50 per barrel by June, a research report by State Bank of India has forecast.

In its latest outlook, SBI Research said global oil markets have remained under downward pressure on the back of OPEC+ production decisions and increasing inventories.

Even the recent geopolitical events linked to Venezuela have failed to push prices up.

Medium-term trends for Brent and the Indian crude basket since 2022 indicate a persistent downward trajectory.

The base case scenario shows Brent crude averaging about $55 a barrel in the first quarter of 2026, based on projections by the US Energy Information Administration. The Indian crude basket, which historically has a high correlation of 0.98 with Brent, is likely to track that softness, SBI’s report said.

Using autoregressive quantile models, the Indian basket is forecast to average about $53.31 per barrel by March and $51.85 by June.

Inflation, Rupee & Growth

SBI Research highlighted that the expected decline in crude prices will be transmitted to retail fuel prices through India’s dynamic daily pricing mechanism.

Historical correlations between crude and retail fuel prices suggest this could help keep average CPI inflation for FY27 decisively below 3.4%, according to the report.

Since oil prices constitute the largest component in the import basket and cannot be substituted with domestic production in the short term, contraction of the import bill on account of crude imports prices will impact the rupee.

SBI’s analysis indicates that assuming a base USD/INR rate of around ₹90.28, the anticipated correction in crude prices could lead to about 3% appreciation in the rupee, potentially bringing it near ₹87.5 to a dollar.

“A part of this could play out in Q4FY26,” it said.

The research house further noted that benign energy prices will have a favourable impact on the GDP outlook, with the expected effect on annual growth estimated at around 10-15 basis points.