Slowdown enters oil track, imports decline

The oil sector seems to be latest addition to the list of sectors facing stress due to the ongoing economic slowdown. For the first time in many months, both oil demand and imports have witnessed a sharp fall, indicating that poor health of the economy has begun impacting a sector where the country relies a lot on imports. The latest Oil Ministry data shows crude oil imports decreased 13.4% and 2.2% in June 2019 and April-June 2019 respectively, compared to the same period the previous year. During the first quarter, India’s oil demand was lower by 0.2% than that a year ago, with the fall sharper in June, at 1.7%.

Though the slowdown in oil imports in a country that spends precious foreign exchange to buy crude oil should be welcomed, yet it reflects the poor demand scenario that has slowed oil imports by refineries.

The refineries are using their inventories to meet domestic supplies of petroleum products rather than buying additional quantities of crude, even though buying at this juncture would be beneficial, with international oil prices at USD 64-65 a barrel.

The Oil Ministry’s Petroleum Planning and Analysis Cell said, except for petrol (10.8%) and diesel (1.4%), sales of industrial, aviation and kitchen fuels have fallen. The slowdown has come at a time