With steep dip in crude price, India oil imports up 2.4%, but bill down 12%
Despite a 2.4% increase in oil import volumes, India's oil import bill decreased by 12% year-on-year in April-November, amounting to $80.9 billion. This significant reduction is attributed to a steep dip in international crude oil prices, which averaged $67.6 per barrel for the Indian basket. While the lower prices positively impact India's economy by easing trade deficit pressures, the country's import dependency rose to 88.6% amid declining domestic production and rising consumption. Net oil and gas imports also saw a similar value reduction.
India experienced a notable 12% year-on-year contraction in its oil import bill during April-November, totaling $80.9 billion, a decrease from $91.9 billion a year prior. This financial relief occurred despite a 2.4% rise in crude oil import volumes, reaching 163.4 million tonnes. The primary driver for this paradox was the significant drop in international crude oil prices, with the Indian basket averaging $67.6 per barrel compared to $80 in the previous fiscal year. This decline is largely attributed to a global supply glut, increased production from major oil-producing nations, and the unwinding of production cuts by OPEC+ amidst slower-than-anticipated growth in global oil demand.While the lower prices offer a positive impact on the Indian economy, mitigating pressures on the trade deficit, foreign exchange reserves, the rupee's exchange rate, and inflation, India's dependency on imported crude oil continues to grow. In the same period, import dependency for domestic petroleum product consumption rose to 88.6% from 88.1%, exacerbated by a decline in domestic crude oil production to 18.8 million tonnes and an increase in petroleum product consumption. The government's 2015 target to reduce import reliance to 67% by 2022 remains unmet. Furthermore, net oil and gas imports also fell by 12.4% in value, reflecting reductions in both petroleum product and natural gas import values, the latter due to lower demand and international price volatility.
