THE MOVE LIKELY TO SUPPORT BATTERED RUPEE

London/ 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 futures surged 2 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 2018 end.

The soaring oil prices are occurring at the same time emerging market currencies, such as India’s 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 is considering cutting its imports and relying on stockpiled crude, said two refinery sources with knowledge of the matter who asked to remain unidentified.

IOC 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. Lower purchase of crude oil would also stabilise the rupee, which is also under pressure from an appreciating dollar.

Oil prices jumped more than 2 per cent to a four- year high on Monday after Saudi Arabia and Russia ruled out any immediate increase in production despite calls by Donald Trump for action to raise global supply.

“This is the oil market’s response to the Opec+ group’s refusal to step up its oil production,” said Carsten Fritsch, commodities analyst at Commerzbank in Frankfurt.