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India’s crude oil imports tab for the first quarter of its financial year soared by 190 percent to $24.7 billion although volumes only grew modestly, by 14.7 percent on the year, the Hindustan Times reports.
The substantial increase reflected the sustained increase in international oil prices, highlighting once again the overwhelming dependence on foreign oil lllpppone of the world’s top consumers. Also, the increase in the import bill came despite the fact fuel consumption has yet to recover to pre-pandemic levels.
In fact, the first quarter of India’s fiscal year, to June, saw partial lockdowns in response to an increase in Covid-19 infections but that didn’t reflect on the amount of oil the country imported during the period. According to the Hindustan Times report, fuel consumption fell in April and May, and partially recovered in June. Overall, however, the first two months of the new financial year were the worst affected by the second wave of infections.
India imports more than 80 percent of the oil it consumes and has been a vocal opponent of OPEC+’s efforts at controlling supply to boost prices. Its oil minister has spoken openly against the production cuts the extended cartel is making in order to push prices higher and has urged OPEC+ to start adding barrels to global supply to keep prices in check.
The situation escalated earlier this year, in April, when Saudi Arabia, confident about the rebound in oil demand, hiked its official selling prices for Asian buyers. In response, New Delhi ordered its state refiners to buy less Saudi oil. As a result, Indian state refiners took in 36 percent less Saudi oil in May than they had previously planned.
The rift highlighted the changing oil market, where there is a more extensive choice of suppliers and big importers could boycott certain producers should they choose to. However, the latest import price information suggests there are limits to buyers’ freedom, especially when dependence on imports is so significant.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.