Page 7 - FIPI - Policy & Economic Report May 2026

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Impact of economic factors on Oil & Gas sector in India

Impact of Index of Eight Core Industries (ICI)

Based on the provided Index of Eight Core Industries (ICI) data for April 2026, the oil and gas sector
comprising Crude Oil, Natural Gas, and Petroleum Refinery Products is facing a broad contraction. These
three segments collectively hold a massive 43.9% weight within the core industries and heavily influence
the broader Index of Industrial Production.

Industry Component Weight in ICI April 2026 Growth (YoY)

Petroleum Refinery Products 28.04% -0.5%

Crude Oil 8.98% -3.9%
Natural Gas 6.88% -4.3%
Total Oil & Gas Sector 43.90% Overall contraction
Source: Ministry of Commerce, PIB

Upstream Vulnerability (Crude Oil & Natural Gas) - With domestic crude and natural gas production
shrinking, India is being forced to rely more heavily on imported energy to meet its basic needs. In a
volatile global market, this exposes the economy to international price shocks and widens the trade
deficit.

Refinery yield prioritization- Further, faced with a -2.2% decline in total crude oil processed (down to 21.4
MMT i.e. indigenous crude oil at 2.1 MMT and imported crude oil at 19.3 MMT) in April 2026, Indian
refiners strategically altered their product slate & maximized high-value transport fuels, i.e. HSD at an
increase of 42.7% share of total output and MS secured a 16.4% share; while bitumen production saw a -
40.2% month-on-month production drop and LPG production dipped by 3.13% month on month.

The Structural Mismatch: Energy vs. Infrastructure

? While the energy supply sectors (Oil, Gas, Coal) are contracting, infrastructure demand sectors
are booming: Cement grew by 9.4%; Steel grew by 6.2%; Electricity grew by 4.1%.

? India's expansion into solar, and wind energy means the electricity grid is becoming less
exclusively dependent on fossil fuels for electricity generation.

? Further, power plants maintain massive buffer stocks and draw from their existing reserves to
keep the steel mills operating.

? Also, a manufacturing plant or construction site would generally rely on commercial electricity
grids and bulk fuel contracts that are secured months in advance and thus will continue to expand
by absorbing whatever energy resources are available.

May 2026 Page | 6