India, the world’s third-biggest oil importer, is considering cutting oil purchases to soften the blow from high crude oil prices and declining rupee, Indian Oil Corp (IOC) Chairman Sanjiv Singh has said.
State refiners are looking at optimising crude oil inventory levels without in any way affecting fuel supplies in the domestic market, a PTI report quoted him as saying.
Refiners maintain 7-8 days of inventory in tankages besides carrying stocks in pipelines as well as ships in transit. They are looking at reducing these so that monthly imports of crude oil can be reduced, he reportedly said.
India is the third largest importer of crude oil and rising international crude oil prices are inflating domestic transport fuel rates in a strong demand environment. Brent, the benchmark for half of world’s oil, climbed to $80 per barrel from $71 in the last five weeks, and the Indian rupee lost ground against the dollar by 5-6 per cent during the same period, resulting in expensive crude imports, the report said.
India is 81 per cent dependent on imports to meet its oil needs. “We had a meeting last to last Saturday (September 15) to deliberate on a host of issues facing the industry and in that meeting, one of the options that was considered was to reduce imports by cutting down on inventory levels,” Singh was quoted as saying.
An important factor guiding the decision was also Asian Premium climbing to as high as $3-5 per barrel in last 3-4 months, he said.
Asian Premium is extra charge being collected by oil-cartel OPEC countries from Asian countries when selling oil in comparison to western countries.
“Reducing inventory levels and imports are being considered as temporary measures without impacting fuel supply in the domestic market,” he was quoted as saying. “This decision would in no way be allowed to impact supplies of petroleum products in the domestic market. Our commitment to meet domestic supplies remains supreme.”
Singh said the high oil prices will in long term impact demand and so reducing imports makes sense.
India reportedly imported 18.6 million tonne (MT) of crude oil in August for $9.8 billion. It had imported 18.1 MT of crude in the same period of 2017 for $6.4 billion, .
During April-August, it has spent $48.9 billion on import of 94.9 MT of crude compared to $31 billion on the import of 89.1 MT in the same period last year, the PTI report said.