New Delhi: India‘s total oil import bill surged to $13.25 billion in February, marking a 10% increase from $12.04 billion in the previous month, despite a slight dip in domestic consumption, according to data from the ministry of commerce and industry.
Russia continued to be the largest crude oil supplier to India, with shipments valued at $3.61 billion in February, despite a 19% decrease from January’s $4.47 billion. The reduction in imports from Russia follows a decline in the discounts offered, which have narrowed significantly from over $30 per barrel in 2022 to below $5 per barrel currently.
Saudi Arabia surpassed Iraq to become India’s second-largest oil supplier, with imports jumping 67.5% to $2.6 billion from $1.55 billion in January. Meanwhile, Iraq, which had been the second-largest supplier for most of the past two years, slid to third place with February imports totaling $2.24 billion, down 11.6% from $2.54 billion in January.
The shift in India’s import dynamics comes amid escalating tensions in West Asia, notably due to recent missile and drone attacks by Iran on Israel, raising concerns over the security of oil supplies through the Strait of Hormuz, a crucial supply route. These tensions have contributed to the volatility in crude oil markets, with prices briefly surpassing the $90 per barrel mark.
“Despite the geopolitical tensions and their potential impact on oil supply routes such as the Strait of Hormuz, the crude oil market has shown resilience with prices stabilizing below $90 per barrel,” said Rahul Kalantri, VP of Commodities, Mehta Equities Ltd. He added that fluctuations in U.S. oil inventories and currency market dynamics are also influencing oil prices.
In related developments, petroleum product consumption in India was reported at 19.75 million tonnes in February, a 1.3% decrease from January’s 20.01 million tonnes, according to the Petroleum Planning and Analysis Cell (PPAC). However, consumption rebounded in March to 21.09 million tonnes.
As global crude oil prices continue to be impacted by geopolitical tensions and economic indicators, industry analysts anticipate ongoing volatility in the markets. “We expect crude oil prices to remain volatile. The current market dynamics provide a mix of support and resistance levels that traders are closely monitoring,” Kalantri noted.
