The Reserve Bank of India (RBI) on Saturday said it will open a special dollar window for three public sector oil marketing companies to cushion pressure mounting on India’s oil sector as crude prices surged above $100 a barrel. The move will allow Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation to meet their entire daily dollar requirements through a facility operated by the central bank.

Effective October 12, 2026, the arrangement will remain in place until further notice. Under the mechanism, the RBI will sell dollars to the three companies through designated banks. The RBI move is likely to reduce the pressure on the rupee, which is almost near the 97 level against the dollar. On Friday, the rupee closed at 96.73 against the dollar.

Scale of the intervention

The decision is significant not merely because of the scale of support, but also because it places the RBI directly at the centre of meeting the oil companies’ dollar needs. The facility is designed to cover the entire daily dollar requirements of all three public sector oil marketing companies, rather than provide limited or partial assistance.

The RBI said its decision was based on an assessment of current market conditions. The facility will remain operational until further notice, with no fixed end date announced. Forex reserves dipped by $12.95 billion to $734.60 billion during the week ended October 2.

High crude feeds inflation

India depends on imports to meet more than 88 per cent of its crude oil requirements. This dependence leaves the economy exposed whenever international crude prices rise or the rupee weakens against the dollar. In September, The Indian Express reported that the three public sector OMCs were facing substantial losses on fuel sales as global petroleum prices rose and domestic retail prices did not fully reflect the increase — the companies were estimated to be losing more than Rs 500 crore daily at the time.

Oil imports have to be paid for, and a weaker rupee increases their cost in domestic currency. When companies cannot fully pass on higher costs to consumers, their margins and finances come under pressure. Higher energy costs can feed into transportation, manufacturing and other sectors, eventually affecting household budgets and inflation. Higher oil prices also lead to imported inflation at a time when retail inflation is forecast to touch 5.2 per cent in FY27 and the RBI is on a rate hiking cycle — it hiked repo rates by 25 bps to 5.50 per cent on October 7.

The RBI’s intervention addresses one part of this chain: the oil companies’ need to buy dollars. It does not remove India’s dependence on imported energy or guarantee that the rupee will strengthen. Analysts said the special window may ease the daily scramble for dollars faced by the three oil companies, but whether it provides lasting relief will depend on broader market conditions, international oil prices and the trajectory of the rupee.