Page 4 - Policy Economic Report - April 2026

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Executive Summary

The global economy in April 2026 is navigating a renewed phase of uncertainty, driven by the escalation
of geopolitical tensions in the Middle East. This development has emerged at a time when global economic
conditions were gradually stabilizing following years of disruptions from the pandemic, monetary
tightening, and trade fragmentation. The current shock is being transmitted primarily through energy
markets, global trade routes, and financial systems, thereby reinforcing downside risks to growth and
adding volatility to an already fragile macroeconomic environment.

According to the International Monetary Fund (IMF), global growth is projected to moderate to around
3.1 per cent in 2026, remaining below historical averages. While advanced economies are expected to
witness subdued growth, emerging markets continue to provide relative support, albeit with increasing
vulnerability to external shocks. Inflation dynamics remain closely tied to energy prices, with crude oil
crossing the $100 per barrel mark, reflecting heightened supply risks and geopolitical premiums. These
developments have reintroduced concerns around cost-push inflation, & tighter financial conditions.

Turning to India, the country remains the fastest-growing major economy, with growth estimated at 7.6
% in FY 2025–26, supported by strong domestic demand, robust performance in manufacturing and
services, and supportive macroeconomic policies. However, the outlook is expected to moderate to
around 6.6 % in FY27, reflecting the impact of rising global uncertainties and higher energy prices.
Inflationary pressures in India remained largely subdued during FY26, supported by lower food prices,
which enabled monetary easing during 2025. Reflecting these dynamics, the RBI has maintained a neutral
monetary policy stance, keeping the policy repo rate unchanged at 5.25 %.

High-frequency indicators present a mixed picture of domestic economic activity. The HSBC Composite
PMI rose to 58.3 in April 2026, indicating strong expansion in private sector activity, driven primarily by
domestic demand. However, export demand remains relatively subdued, reflecting weakening global
trade conditions. Similarly, while indicators such as GST collections, e-way bills, and digital payments
suggest continued strength in consumption, sectoral divergences are becoming more visible, particularly
in areas affected by global disruptions.

India’s external sector reflects both resilience and emerging pressures. Foreign exchange reserves have
stabilized at around $700 billion, providing a strong buffer against external shocks. At the same time, trade
performance in March 2026 showed a contraction in both exports and imports on a year-on-year basis,
indicating softening global demand and adjustments in trade flows.

As far as oil and gas industry is concerned, the resumption of flows through the Strait of Hormuz remains
the single most critical factor in alleviating pressure on energy supplies, prices, and the global economy.
The latest development in this rapidly evolving situation is the announced US blockade on vessels entering
or departing Iranian ports and coastal waters, which was scheduled to take effect shortly. In early April,
shipments through the Strait remained severely constrained, with loadings of crude oil, natural gas liquids,
and refined products averaging approximately 3.8 mb/d, compared with more than 20 mb/d in February

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