Page 5 - Policy Economic Report - Feb 2026

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

The food inflation for January has estimated to be 2.13 per cent, and housing at 2.05 per cent. The retail
inflation, under the old series with base year 2012, was 4.26 per cent in January 2025 and 1.33 per cent
in December. Headline inflation in rural areas during January was 2.73 per cent and in urban India 2.77
per cent, according to NSO data. The new series released by the National Statistics Office (NSO) under
the Ministry of Statistics & Programme Implementation has increased the number of goods from 259 to
308 and services from 40 to 50 to provide a better picture of the price situation. According to the new
CPI series, Telangana had the highest inflation at 4.92 per cent, followed by Kerala and Tamil Nadu.

The HSBC Flash India PMI Composite Output Index, which measures the month-on-month change in the
combined output of India's manufacturing and service sectors, indicated continued strong growth
momentum across the private sector. India's private sector activity strengthened further in February, with
the HSBC Flash India PMI Composite Output Index rising to 59.3 from 58.4 in January, marking the
strongest rate of expansion in three months, according to data released by HSBC.

According to HSBC, the acceleration in growth was driven primarily by a quicker increase in factory
production, while the services sector maintained a broadly similar pace of expansion as seen at the start
of the 2026 calendar year.

India's foreign exchange (forex) reserves rose sharply by $8.6 billion to a record high of $725.7 billion in
the week ended February 13, 2026, as per the latest Reserve Bank of India (RBI). According to RBI, the
value of gold reserves, a key component of foreign exchange reserves, increased by 4.990 billion dollars
to 128.466 billion dollars. Foreign Currency Assets (FCA), the largest component of forex reserves,
increased by 3.550 billion dollars to 573.603 billion dollars. FCA includes the dollar, along with several
other major global currencies such as the yen, euro, and pound, whose value is expressed in dollars. The
value of SDRs (Special Drawing Rights) increased by 103 million dollars to 18.924 billion dollars.

India’s total exports (Merchandise and Services combined) for January 2026 is estimated at US$ 80.45
Billion, registering a growth of 13.17 percent vis-à-vis January 2025.

As far as oil and gas industry is concerned, benchmark crude oil prices surged in January as a number of
supply outages tightened physical crude markets and geopolitical tensions rose between Iran and the
United States. While prices gave back a few dollars at the start of February on reports of progress in
ongoing negotiations to de-escalate the tensions, they quickly reversed course after the United States
advised ships to steer clear of Iranian waters when navigating the Strait of Hormuz.

Hedge funds and other money managers turned bullish in January, raising their net long positions sharply,
particularly in ICE Brent, where positions reached a four-month high. The increase in net long across ICE
Brent, NYMEX WTI, and ICE WTI reflects a rapid shift in risk appetite by speculators, underpinned by
sizeable financial inflows over the month. This repositioning was driven by a combination of market-
driving factors. Supply disruptions and heightened geopolitical risks boosted price expectations, while
stronger physical market signals reinforced confidence in underlying fundamentals. The rally in net long

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