India may cut crude imports

India plans to rely more on cheaper crude already stored in inventories

New Delhi, Sept. 24: With oil traders forecasting crude oil to rise to $100 a barrel by the end of the year, Indian refiners are considering cutting back their imports and relying more on cheaper crude already stored in inventories, according to industry executives.

Benchmark Brent crude oil futures surged two per cent on Monday to over $80 a barrel as markets have tightened ahead of the start of sanctions by the US on Iran, with commodity merchants Trafigura and Mercuria predicting $100 oil by the end of 2018.

The soaring oil prices are occurring at the same time emerging market currencies, including the rupee, are under pressure. That combination means Indian crude imports are 47 per cent more expensive this year in rupee terms.

To cope with the higher costs, India, the world’s third-biggest oil importer, is considering cutting its imports and relying on stockpiled crude, said two refinery sources with knowledge of the matter who asked to remain unidentified.

Indian Oil chairman Sanjiv Singh confirmed the plan to cut imports in favour of stockpiled crude was discussed at a September 15 meeting attended by refinery officials.

“Apart from other options, we are also considering reducing inventory to cut import costs,” said Singh, adding that the refiners would also look at reviewing their crude