Page 5 - Policy Economic Report -August 2026

POLICY AND ECONOMIC
OIL & GAS MARKET

sector. However, the contraction in crude oil production (-5.3 per cent) and natural gas production (-3.7
per cent) highlights India's continuing dependence on imports and the need to accelerate domestic
exploration and production.

Impact of external trade developments

The external trade data provide another important signal. Petroleum-product exports increased by 67.64
per cent to US$6.92 billion in July 2026, making petroleum products one of the major contributors to
merchandise export growth. This is positive for Indian refiners, particularly those with export-oriented
refining capacity, as strong overseas demand can support refinery utilization and
profitability. India's foreign-exchange reserves reached a record US$729.33 billion, providing a substantial
external-sector buffer. This is particularly positive for the oil & gas sector because a strong reserve position
improves India's ability to manage periods of elevated crude and LNG import costs and reduces
vulnerability to external commodity-price shocks.

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