Page 5 - Policy Economic Report - September 2026

POLICY AND ECONOMIC
OIL & GAS MARKET

This trend underlines the continuing importance of strengthening domestic exploration and production,
improving recovery from mature fields, deploying advanced technologies and accelerating development
of discovered resources. Greater domestic production would also support India’s broader objective of
enhancing energy security and reducing vulnerability to international commodity-price movements.

Higher energy prices and cost pressures

Energy-price volatility remains one of the most significant risks for the oil and gas industry. Wholesale
inflation in the Fuel and Power category accelerated to 22.93% in August 2026, while mineral-oil inflation
increased to 38.48%. Inflation in crude petroleum and natural gas remained elevated at 34.41%. These
movements can transmit higher costs across transportation, manufacturing and other energy-intensive
sectors.

Outlook

Strong economic growth, manufacturing activity, infrastructure investment and petroleum-product
exports provide a favourable demand and downstream environment. However, declining domestic crude
oil and natural gas production and elevated energy-price volatility remain areas requiring focused policy
and industry attention.

The sector’s future resilience will therefore depend on balancing growing energy demand with enhanced
domestic production, technological innovation, efficient refining, diversified supply sources and greater
operational efficiency.

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