India’s crude oil imports plunged by 22.6 percent year on year in May, the biggest drop since October 2011, as fuel demand and refinery production took a huge hit on account of a countrywide lockdown to curb the spread of the deadly coronavirus.
According to the preliminary data from Petroleum Planning and Analysis Cell, India imported 3.18 million barrels per day (bpd) of oil last month, a 31% decline from April.
With crimping of domestic demand due to the lockdown, Indian refiners filled up tanks with cheaper oil in April 2020 as prices dropped internationally. They then sold the extra cargoes to the government for strategic reserves and declared force majeure on crude imports.
Also refiners, who normally book cargoes one to two months in advance, deferred some term cargoes scheduled for lifting in April 2020.
Saudi Arabia led as the top oil supplier to India in May 2020 for the second consecutive month, although supplies from the region declined by nearly 28% from April 2020, according to the released data.
According to data compiled by Reuters, India’s oil imports from Iraq fell by 43% to about 554,000 bpd, the lowest since October 2016,
India’s oil imports from key suppliers
Oil imported from Venezuela dropped to its lowest in May since June 2011. Reliance Industries, the operator of the world’s biggest refining complex, bought about 2 million barrels of oil from the country.
Another private refiner Nayara Energy, part-owned by Russian oil major Rosneft, did not import from the Latin American nation in May, under pressure from the US sanctions against Venezuelan national oil company PDVSA.
Venezuela and other producing nations under Organization of the Petroleum Exporting Countries (OPEC) have agreed on cutting back output to stabilise international oil markets.
India’s imports from OPEC fell to an all-time low of 71.3%, while the share of US oil hit a record high of nearly 8% in May 2020.
Recovery expected albeit slow
With the gradual opening up of the economy and resumption of transport and industrial activity, India’s oil imports in June are expected to revive as refiners have increased crude processing with demand rise.
However, industry analysts expect a full-scale recovery to pre-COVID-19 consumption levels in India to be months away as manufacturing activities continue to remain low and transportation demand is still to register an upsurge in some parts of the country.