Subdued crude prices help lower India’s oil import bill in Sep-Nov even as volumes rise

Heavy dependence on imported crude oil makes the Indian economy vulnerable to global oil price volatility, apart from having a bearing on the country’s trade deficit, foreign exchange reserves, rupee’s exchange rate, and inflation. The government wants to reduce India’s reliance on imported crude oil but sluggish domestic oil output in the face of incessantly growing demand for petroleum products has been the biggest roadblock.

India’s oil imports in value terms declined 9 per cent year-on-year in the September-November period to $31.2 billion, even as import volumes were higher by 4.4 per cent at 57.2 million tonnes, according to an analysis of provisional oil industry data from the Petroleum Planning & Analysis Cell (PPAC) of the oil ministry. Import value was lower by 13 per cent in November, 10.9 per cent in October, and 2.8 per cent in September, as compared to the respective months of the previous fiscal. On the other hand, import volume rose 2.7 per cent in November, 4.3 per cent in October, and 6.3 per cent in September.

In the previous five months (April-August) of the current fiscal, cumulative oil imports in value terms rose 14.2 per cent year-on-year to $60.3 billion, while volumes grew by just 2.6 per cent to 101 million tonnes.

Overall, in the first eight months of FY25, oil import volumes rose 3.5 per cent year-on-year to 159.4 million tonnes, while the value of those imports was higher by 5 per cent at $91.8 billion against $87.4 billion in April-November of the last fiscal. If the divergence in import volumes and value as observed in September-November persists over the coming months, the total oil import bill for the full financial year 2024-25 could end up lower on a year-on-year basis despite a growth in import volumes.

Oil prices in the international market have been under pressure for a few months now mainly due to softening in demand from China, recent strengthening of the US dollar—which dampens demand as dollar-denominated commodities become expensive—and concerns about global economic growth.

The price of global benchmark Brent crude declined from around $91 per barrel in early April to around $71 per barrel by November-end. The price of Indian crude oil basket declined from $89.44 per barrel in April to $73 per barrel in November. The Indian basket of crude oil represents a derived basket comprising sour grade and sweet grade crudes processed in Indian refineries in the ratio 78.50 : 21.50.