Import bill for crude oil jumps over 190%
NEW DELHI: The country’s crude oil import bill in the first quarter of the current fiscal has surged over 190% to $24.7 billion compared to $8.5 billion in the corresponding period of the previous fiscal. In terms of volume, the growth is 14.7% in the quarter ended June 30, at 51.4 million tonne, according to official data.
The import bill in the first quarter has spiked despite domestic fuel consumption not reaching normal levels. As international oil prices are unlikely to fall sharply in the near future, and India’s fuel consumption is moving up, the country’s oil import bill is expected to exceed $100 billion in FY22, two officials aware of development said requesting anonymity.
According to Petroleum Planning and Analysis Cell (PPAC), the official datakeeper of the petroleum ministry, India had imported little over 198 million tonnes of crude oil worth $62.7 billion in 2020-21.
India, which imports more than 80% crude oil it processes, had seen a decline in consumption of petroleum products in the first quarter of current fiscal year because of the lockdowns in various places to contain the spread of the second wave of Covid-19 pandemic.
According to PPAC, domestic consumption of petroleum products in April this year fell 9.28% at 17.03 million tonnes compared to the previous month. It plunged further to 15.12 million tonnes in May 2021 and gradually recovered to 16.33 million tonnes in June 2021. The first two months of the current fiscal year were worst affected by the second wave.
While declaring state-run Indian Oil Corporation’s (IOC) first quarter performance, its chairman SM Vaidya said last week that petrol demand had already reached at pre-pandemic level as people preferred personal vehicles than public transport, but growth in diesel consumption was still low. He expected diesel sales to reach pre-pandemic level by Diwali in November provided there was no lockdowns due to the third wave.
SC Sharma, an energy expert and former officer on special duty at the erstwhile Planning Commission said the spike in India’s import bill in the first quarter of current fiscal year is because of high crude oil prices. As against $44.82 per barrel average import price in 2020-21, oil import prices have averaged at $67.44 per barrel in the Q1 of 2021-22, he said. Average oil import price has further jumped to $73.54 a barrel in July 2021, according to PPAC, indicating an upward trend.
Even as international oil market is volatile, crude oil prices are still above $70 per barrel. Brent crude jumped 0.9% at $71.02 during the intraday trade on Thursday.
Experts working in refining industry expect prices to firm up in future as many countries are witnessing rapid economic recoveries. “One of the striking features for future oil prices is likely to be the oil demand spurt globally as economic activities are picking up due to large scale vaccination. It is also said that the oil demand for India during 2020-21 was lower by 20 million tonnes compared to FY-2019-20 i.e. about minus 10%,” Sharma said.