Crude oil imports by India, the world’s third largest importer of the most critical fossil fuel, declined by almost 4 per cent M-o-M to 18.73 million tonnes (mt) in August largely due to production cuts by Russia and autumn refinery maintenance.

However, imports last month were higher on an annual basis by more than 6 per cent from 17.64 mt in August 2022.

According to the Petroleum Planning and Analysis Cell (PPAC), the in-bound shipments fell for the third consecutive month in August in line with voluntary production cuts by Russia, which also impacted its most sought after medium sour grade Ural.

Urals shipments from Russia to India in August slipped to its lowest levels since January this year.

The imports in August were also the lowest since November 2022. India imported 18.12 mt of crude oil in October 2022. Besides, the import of crude oil during August is the lowest in FY24 and calendar year 2023.

Lower consumption

Trade sources said the decline in August was due to narrowing discounts on the Urals grade and smaller appetite from Indian refiners due to planned autumn maintenance at some refineries, and lower domestic demand on account of the rainy season till September.

However, India’s monthly crude oil import bill rose to $10.9 billion in August from $10.3 billion in July 2023 as global prices edged up following voluntary production cuts by Saudi Arabia and Russia. The import bill was lower on an annual basis.

The price of Brent Crude averaged $86.22 per barrel during August 2023 as against $80.05 in July 2023 and $99.99 barrel in August 2022. The Indian basket crude price averaged $86.43 per barrel in August 2023 against $80.37 during July 2023 and $97.40 in August 2022.

According to the International Energy Agency (IEA), the shipments to China and India slumped to 3.9 million barrels per day (mb/d) in August 2023 from 4.7 mb/d in April and May 2023 but accounted for more than half the total volumes.

According to IEA data, the world’s top two crude oil consumers accounted for 80 per cent of Russia’s total exports during May to July this year.

Demand to appreciate

A senior oil marketing company official said that fuel demand will rise during the October-December quarter due to heightened industrial, mining, construction and farm activity. The festival season preparations by FMCG and FMCD companies will also propel consumption.

According to OPEC, India’s oil demand is expected to decelerate slightly, but is forecast to show a Y-o-Y growth of 243,000 barrels per day in Q4 2023, with transportation fuels – notably gasoline, diesel for transportation, and jet/kerosene – driving the growth.