A significant softening in global crude oil prices is on the horizon, with a potential slide to $50 per barrel by the middle of 2026, according to a new analysis by SBI Research. This forecast, released on Monday, suggests a faster-than-expected deceleration that could deliver a dual boost to the Indian economy by easing inflationary pressures and supporting growth.
Key Projections and Driving Factors
The report, authored by SBI group's chief economic advisor Soumya Kanti Ghosh and his team, aligns with estimates from the US Energy Information Administration (EIA). The EIA projects that the average price of Brent crude oil will fall to $55 per barrel in the first quarter of 2026. The primary driver behind this anticipated decline is identified as a substantial buildup of global inventory.
For India, the implications are direct and profound. The analysis highlights that the India crude basket has an extremely high correlation of 0.98 with Brent crude. Therefore, the downward trend projected for Brent strongly indicates a parallel and significant softening in the price of the Indian basket.
Technical Indicators Signal Further Decline
Adding weight to the fundamental analysis, SBI Research also examined technical indicators for Indian crude. The report notes that current prices are trending below both the 50-period and 200-period moving averages. This technical pattern is a strong signal that prices are likely to move to future levels lower than the current $62.20 per barrel.
Positive Ripple Effects for the Indian Economy
The anticipated sharp correction in oil prices is poised to have wide-ranging positive consequences. A sustained drop would directly reduce India's massive import bill, improving the current account deficit. More importantly, it would act as a major disinflationary force, giving the Reserve Bank of India more room to maneuver on interest rates to foster economic growth. Cheaper fuel and lower input costs across industries could stimulate consumption and investment, providing a tailwind for the broader economy.
While the forecast points to mid-2026 for the $50 per barrel mark, the analysis suggests the deceleration process could gain pace sooner, offering earlier relief than many market watchers currently expect.
