Economy
Petro product exports decline 23% in April amid western turmoil
Summary
- While easing crude oil prices have brought down India’s import bill, petroleum exports were benefiting from imports of cheap Russian oil
NEW DELHI : Petroleum products exports, which was a key growth driver of overall Indian exports during the last financial year, registered a sharp 23% decline in April due largely to recessionary conditions in the West that has cooled global crude prices too, commerce ministry data showed.
While easing crude oil prices have brought down India’s import bill, petroleum exports were benefiting from imports of cheap Russian oil. Russia emerged as the largest exporter of oil to India in the last financial year with supplies crossing 50 million tonnes.
Official data showed that India exported petroleum products worth $8.12 billion in March compared to $6.23 billion in April, down by over 23%.
The value of petroleum products exports to the Netherlands, one of India’s largest export destinations slipped by over 43% in April compared to the previous month due to easing crude prices and weaker demand in Europe. The Netherlands is a major distribution hub helping petroleum exports from India find their way to other European countries.
Lower demand for petroleum products also coincides with a contraction in Germany’s economy. High inflation in the backdrop of the Ukraine war pushed Berlin into recession in the first three months of the year.
However, the European Commission recently revised the Euro Zone growth forecast upwards to 1% in 2023, from a previous estimate of 0.8%.
India’s petroleum products exports to the UAE, another transnational hub, also declined by nearly 20% in April compared to March. Exports to Singapore, the US and Togo declined 14%, 61% and 48%, respectively.
Russia emerged as the largest exporter of oil to India in the last financial year with 50.84 million tonnes of crude supplies, followed by Iraq, Saudi Arabia, the UAE and US which supplied 50.31 mt, 39.37 mt, 21.50 mt and 15.16 mt.
Volatility in international crude oil prices plays a major role in the Indian economy as the country imports around 85% of its energy requirement and energy imports are a major part of its import bill.
According to the World Bank, crude oil prices are projected to average $80/bbl in 2023, down $8/bbl from its January forecast, and is expected to edge up to $82/bbl in 2024, reflecting a modest pickup in demand.
“Energy prices could be lower if global demand is weaker than expected. In this respect, prospects in China play a particularly important role, as it is expected to account for more than half of the increase in global oil demand in 2023. On the upside, risks to the price forecast relate to a lack of expansion in US oil production, low levels of spare capacity among OPEC members, and to the possibility that the cartel may decide to cut output further," the World Bank said.
Weakening oil prices are beneficial for the economy as India imported crude oil worth $158.3 billion in the last fiscal (FY23) up from $120.7 billion in 2021-22, as per data from the Petroleum Planning & Analysis Cell.
