Govt looks to cut oil imports to soften crude shock, rupee slide

India, the world's thirdbiggest oil importer, is considering cutting oil purchases to soften the blow from high crude oil prices and declining rupee, Indian Oil Corp (IOC) Chairman Sanjiv Singh said on Monday. State refiners are looking at optimising crude oil inventory levels without in any way affecting fuel supplies in the domestic market, he said.

Refiners maintain 7-8 days of inventory in tankages besides carrying stocks in pipelines as well as ships in transit. They are looking at reducing these so that monthly imports of crude oil can be reduced, he said.

India is the third largest importer of crude oil and rising international crude oil prices are inflating domestic transport fuel rates in a strong demand environment. Brent, the benchmark for half of world's oil, climbed to $80 per barrel from $71 in the last five weeks, and the Indian rupee lost ground against the dollar by 5-6 per cent during the same period, resulting in expensive crude imports. India is 81 per cent dependent on imports to meet its oil needs.

"We had a meeting last to last Saturday (September 15) to deliberate on a host of issues facing the industry and in that meeting, one of the options that was considered was to reduce imports by cutting down on inventory levels," Singh said.

An important factor guiding the decision was also Asian Premium climbing to as high as $3-5 per barrel in last 3-4 months, he said.

Reducing inventory levels and imports are being considered as temporary measures without impacting fuel supply in the domestic market," he said. "This decision would in no way be allowed to impact supplies of petroleum products in the domestic market. Our commitment to meet domestic supplies remains supreme."