Crude Oil Prices May Fall to $70 Per Barrel in 2027: SBI Forecast Offers Hope of Relief for India

International crude oil prices could fall to around $70 per barrel in 2027 as geopolitical tensions ease and supplies from the Middle East improve, according to a recent report by the State Bank of India. If the forecast materialises, it could offer some relief to India, which depends heavily on imported crude oil to meet its energy requirements.

According to the report, Brent crude prices are expected to average around $87 per barrel over the next 10 days, based on SBI's LTSM forecast. The bank believes prices could gradually decline towards levels last seen in February 2026, provided global conditions improve.

The forecast comes amid continuing uncertainty in international energy markets, particularly because of tensions between the United States and Iran and disruptions affecting oil supplies from West Asia.

US-Iran Tensions and Rising Oil Supplies Could Push Prices Down

SBI has identified improving geopolitical conditions and increasing crude oil exports from the Middle East as important reasons behind its prediction. Any progress towards reducing tensions between Washington and Tehran could ease concerns about disruptions to oil production and transportation. The Middle East is a major supplier of crude oil, and instability in the region can affect global supply and push prices higher.

The possibility of a more predictable US economic and political environment following the midterm elections could also support stability in energy markets. International supply forecasts offer some support to this outlook. The International Energy Agency (IEA), in its November 2026 Oil Market Report, projected that global oil supply could increase by 6.6 million barrels per day in 2027, reaching an average of 108.1 million barrels per day.

The agency also expects global oil demand to recover by around 2 million barrels per day in 2027. The expected increase in supply could help improve market availability, although geopolitical disruptions remain a significant risk.

What Could Cheaper Crude Oil Mean for India?

A decline in international crude oil prices could be particularly important for India, which imports around 88% of its crude oil requirements. When international oil prices rise, India's expenditure on imports generally increases, putting pressure on foreign exchange reserves and the country's external finances. Lower prices could reduce this burden and help improve the country's import balance.

Cheaper crude oil could also benefit industries that depend heavily on fuel and transportation. Airlines, logistics companies, manufacturers and other businesses could see some relief in operating costs if lower international prices translate into cheaper domestic fuel and petroleum products. However, the actual benefit would depend on import volumes, the rupee-dollar exchange rate and domestic fuel pricing decisions.

Will Petrol and Diesel Prices Become Cheaper?

For Indian consumers, the biggest question is whether a decline in crude oil prices will translate into cheaper petrol and diesel. However, lower international crude prices do not automatically guarantee a reduction in retail fuel prices.

Domestic petrol and diesel prices depend on several factors, including the rupee's value against the US dollar, transportation costs, refinery expenses, central excise duty and state-level taxes.

Therefore, even if crude oil reaches $70 per barrel in 2027, the final benefit to consumers will depend on how these factors change. Nevertheless, a sustained decline in international oil prices could create room for some relief in fuel-related expenses.

The crude oil forecast also comes at a time when India's inflation has crossed the Reserve Bank of India's upper tolerance limit. According to the Ministry of Statistics and Programme Implementation (MoSPI), India's retail inflation stood at 6.09% in October 2026, exceeding the RBI's upper limit of 6%.

Higher crude oil prices can increase transportation, manufacturing and distribution costs, adding to inflationary pressure. A decline in oil prices could help ease some of these costs.

SBI believes improving external conditions and greater stability in the rupee have reduced the possibility of a larger interest rate increase by the RBI. The bank expects a 25-basis-point repo rate hike in December rather than a 50-basis-point increase. However, this remains SBI's assessment and not an official decision by the central bank.