According to government data, India’s crude oil imports have declined for the third consecutive month in August. The data, released by the Petroleum Planning and Analysis Cell (PPAC), reveals a 3.9% month-on-month decrease, with imports reaching 18.73 million metric tons. Analysts attribute this decline to refinery maintenance activities being carried out by Indian refiners, as well as reduced shipments from Russia.
LSEG analyst Ehsan Ul Haq explains that the decrease in imports was expected due to the scheduled maintenance activities. Additionally, higher prices for Russian oil could have influenced Indian refiners to reduce their imports. However, Haq suggests that demand might pick up during the upcoming festive season.
Trade flow data from global analytics firms Kpler and LSEG also indicate that India’s oil imports from Russia reached a seven-month low in August. Refiners in India reduced their purchases of Russian oil due to maintenance outages and narrowing discounts.
Although there has been a decline in crude oil imports, the overall imports in August are still up by 6.2% compared to the same month last year. In addition to this, oil product imports have risen by 26.5% to 4.06 million metric tons from August last year.
On the other hand, India’s fuel consumption in August has slightly increased from a 10-month low, thanks to strong factory activity offsetting the usual monsoon lull.
The oil price rally, with prices nearing $100 a barrel, has been driven by factors such as weak U.S. shale output and extended production cuts by Saudi Arabia and Russia. As a result, expectations of tight supply have emerged.
In July, India also implemented a windfall tax on petroleum crude to limit private refiners from benefitting from robust refining margins in overseas markets instead of selling at home.
Overall, India’s crude oil imports have experienced a decline due to refinery maintenance and reduced shipments from Russia. However, the country’s overall imports are still higher compared to the previous year, and there is optimism regarding the future demand during the festive season.