Crude oil import bill soars 76% to $90.3 bn in Apr-Sep

NEW DELHI: India’s crude oil import bill surged 76% to $90.3 billion in the first half of 2022-23 even as the total import quantity increased by 15% to 116.6 million tonnes because of supply squeeze by the producer’s cartel who wants for keep international oil prices artificially high, official data showed.

In the month of September, India’s crude oil import was almost stagnant at 17.6 million tonnes compared to 17.5 million tonnes a year ago, but it jumped 38% by value on account of rising prices. India purchased crude worth $12.8 billion in September compared to $9.3 billion it spent in the same month a year ago.

High energy prices are a major global concern . According to the World Bank’s latest Commodity Markets Outlook report, energy prices are expected to jump 60% in the current calendar year before they decline 11% in 2023.

“Despite this moderation, energy prices next year will still be 75% above their average over the past five years,” the World Bank said in a October 26 statement.

“The combination of elevated commodity prices and persistent currency depreciation translates into higher inflation in many countries,” it said quoting economist Ayhan Kose, who is also director in the World Bank’s Prospects Group.

Many advanced economies are facing decades-high high food and fuel inflation because of supply disruptions due to the Ukraine war and output cuts by OPEC +. The producers’ cartel of 13 countries is known as OPEC and along with 10 other producers, including Russia it forms OPEC+.

On October 5, OPEC+ agreed to cut production by 2 million barrels a day to keep oil on the boil. As a result, India’s average oil import cost rose to $91.66 per barrel this month (up to October 28) as compared to $90.71 a barrel in September.

On Thursday, India’s imported crude at $93.02 a barrel, 1.5% up from the month’s average of $91.66, even as Benchmark Brent crude hovered around $96 a barrel on the Friday session.

“International crude oil prices that saw some corrections in September are again moving up due to supply constraints, which is a concern for global economies, including India. Inflation in India is relatively low compared to major economies because of government’s measured fiscal and monetary policy measures,” one official aware of the development said requesting anonymity.

Retail inflation in India, as measured by the consumer price index (CPI), however, remains above the Reserve Bank of India’s (RBI) upper tolerance limit of 6%. The oil ministry’s spokesperson did not respond to an email query on this matter.

After hitting a peak of 7.8% in April, India’s retail inflation, gradually moderated to 6.71% in July, only to rise again to 7% in August and 7.41% in September despite RBI’s move to raise repo rate by 190 basis points (1.9% points) since April.

The central bank on Thursday decided to call an “additional meeting” of its Monetary Policy Committee (MPC) on November 3 to prepare a report on its failure to keep retail inflation below 6% for three consecutive quarters.

Experts said crude oil prices are volatile and a major concern for global economies. Rahul Kalantri, vice president commodities at Mehta Equities Ltd said, “Crude oil showed high price volatility and extended its gain on Thursday on the back of higher demand and easing recession fears that supported crude oil prices in the international markets.”

“We expect crude oil prices to remain volatile although output cuts by OPEC+ nations would continue to support oil prices,” he added.

AFP Experts said crude oil prices are volatile and a major concern for global economies.