India's Crude Oil Imports Fell to 10-Month Low in August Due to Production Cuts by Russia

The imports in August were the lowest since November 2022 due to autumn refinery maintenance by Russia. India's monthly bill on crude oil, however, rose from $10.3 billion in July to $10.9 billion in August.

New Delhi: India’s crude oil imports declined to a 10-month low in August, primarily due to production cuts by Russia and autumn refinery maintenance. The 18.73 million tonnes of imports in August is 4% lower than in July.

The imports in August were the lowest since November 2022. However, imports last month were higher on an annual basis by 6% in comparison to August last year.

According to Business Line, the Petroleum Planning and Analysis Cell (PPAC) said the imports fell for the third consecutive month in August due to “voluntary production cuts by Russia”, also impacting its most sought-after medium sour grade Ural. Ural imports from Russia to India in August slipped to their lowest levels since January this year.

The reduction in imports, traders in India say, is due to smaller discounts on the Urals grade and the decreased appetite on the part of Indian refiners owing to planned autumn maintenance at some refineries. It is also due to reduced domestic demand in the country in the wake of the rainy season until September.

Despite the dip in imports, India’s monthly bill on crude oil rose, from $10.3 billion in July to $10.9 billion in August given that production cuts by Russia and Saudi Arabia hiked global crude prices. However, India’s import bill in August was lower on an annual basis.

In August this year, Brent Crude was sold at an average of $86.22 per barrel in the global market compared to $80.05 in July 2023 and $99.99 per barrel in August 2022. As for India, the basket crude price was averaged at $86.43 per barrel in August 2023 against $80.37 during July 2023 and $97.40 in August 2022.

The International Energy Agency (IEA) noted that the shipments to China and India dipped to 3.9 million barrels per day in August 2023 from 4.7 mb/d in April and May 2023 but accounted for more than half the total volumes. It also observed that the top two crude oil consumers globally accounted for 80% of Russia’s total exports during May-July this year.

According to a senior oil marketing executive, quoted by Business Line, the demand for oil in the upcoming festive season, October-December, would spike owing to increased industrial, mining, construction, and farm activity. The official also said preparations for the festival season by firms in the fast-moving consumer goods (FMCG) and fast-moving consumer durables (FMCD) industry could also increase the demand for oil.