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Due to the pandemic that shut down some oilfields, India’s oil production dropped by 5 percent year over year in the fiscal year between April 2020 and March 2021, while refiners processed 13 percent less crude because of the slump in fuel demand, according to government data cited by The Economic Times.
Natural gas production in India also slumped, by 8 percent, in the fiscal year that has just ended, the data showed.
According to the data from the Petroleum Planning & Analysis Cell (PPAC), the volume of India’s crude oil imports fell by 12.7 percent between April 2020 and March 2021 compared to the same period of the previous fiscal year. In terms of value, India spent US$61.9 billion on crude oil imports in April 2020-March 2021, down from US$101.4 billion in 2019/2020.
While some of the lower import bill was due to the lower imported volumes, most of the drastic decline in India’s spending on crude was because of the ultra-low oil prices in the spring of 2020. Back then, India—and the other major importer in Asia, China—embarked on a buying spree to stock up on low-priced crude.
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India used the ultra-low crude oil prices last spring to top its strategic petroleum reserves with oil at $19 a barrel, saving nearly US$700 million in the process, India’s Ministry of Petroleum and Natural Gas said in September. The average cost at which India bought the crude oil in April and May was $19 per barrel, compared to $60 a barrel oil price in January 2020. Thanks to the cheapest oil in years at the start of the second quarter, India saved US$685.11 million on its crude oil import bill, the ministry said.
As oil prices rallied in recent months, India—the world’s third-largest oil importer—expressed its frustration with the OPEC+ decisions to keep markets tight, calling out OPEC+ for its “artificial cuts to keep the price going up.”
India’s sensitivity to high oil prices resulted in the government asking Indian state refiners to aggressively diversify oil imports away from the Middle East and its oil kingpin Saudi Arabia.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com