The role of biosurfactants producing hydrocarbon-degrading bacteria (HDB) on biodegradation and bio-corrosion was evaluated. Biodegradation efficiency (BE) of Streptomyces parvus B7 was found to be 82% when compared to other bacteria. Increased production of biosurfactants directly influences the rate of crude oil BE. Corrosion of carbon steel was found to be more severe in mixed bacterial consortia (1.493 ± 0.015 mm/y). X-ray diffraction confirmed the presence of high intensity of ferric oxide (Fe2O3), iron oxide (Fe3O4), manganese oxide (Mn3O4), and manganese dioxide (MnO2) in corrosion product of mixed bacterial system. Biofilm formation was assist to pit formation on the carbon steel surface and it was evidenced from the atomic force microscopy (AFM) and scanning electron microscopy (SEM) analysis. Corrosion current was increased in the presence of mixed consortia 1.6 ± 0.2 × 10−3 A/cm−2, compared to abiotic control 1.2 ± 0.15 × 10−4 A/cm−2, this values were well supported with charge transfer values and these observations confirmed that mixed bacterial consortia play key role in the corrosion of carbon steel. This is the first report to show degradation of crude oil by Streptomyces parvus B7 and its effects on the corrosion of carbon steel in oil reservoir.