In December, India experienced an uptick in its crude oil imports, reflecting robust demand, according to data from the Petroleum Planning and Analysis Cell (PPAC) released on Monday. The figures revealed that crude imports for the month climbed by 1.1% compared to the same period last year, reaching 19.83 million metric tons. This marks a notable 7.4% increase from the previous month.
India, ranking as the world’s third-largest oil importer, witnessed a surge in fuel consumption to a seven-month peak during December. Prashant Vasisht, the vice president and co-head of corporate ratings at ICRA, attributed this rise to a broader economic recovery, which has fueled the growing imports.
Throughout 2023, crude futures experienced a tumultuous period, witnessing a decline of over 10%. This turbulent market environment was characterized by geopolitical tensions and uncertainties surrounding the oil production levels of major producers.
Giovanni Staunovo, an analyst at UBS, highlighted that besides escalating Indian oil demand, the decline in crude prices also facilitated increased imports. Notably, India saw a spike in imports of Nigerian crude from November to December, taking advantage of Nigeria’s surplus cargoes.
Meanwhile, data from the PPAC website indicated a 4% decrease in product imports, amounting to 3.89 million tons compared to December of the preceding year. Conversely, product exports experienced a 2.5% uptick during the same period, totaling 5.84 million tons.
An intriguing development noted by Staunovo was the substantial increase in diesel exports, which surged by 18% to 2.84 million tons year-on-year. This surge is speculated to have been driven by European demand, particularly as EU nations implemented bans on Russian oil imports amidst the conflict in Ukraine.
The Red Sea crisis, marked by attacks from Yemen’s Iranian-backed Houthi group, has prompted significant disruptions to shipping routes. As a result, freight costs have skyrocketed, with shipping expenses from Asia to Europe soaring by 350%, as reported by Goldman Sachs.
Despite the challenges posed by the Red Sea crisis, Hindustan Petroleum Corp Ltd expressed confidence in the continuity of its supply chains, foreseeing no significant disruptions. This assurance reflects the resilience and adaptability of India’s oil sector amid dynamic geopolitical circumstances and evolving market conditions.
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