India’s petroleum exports plunge in first five months of FY25 on lower demand, supply disruption

  • The penetration of electronic vehicles in Europe has increased which may have hit fuel demand, experts said

Rhik Kundu, Rituraj Baruah
Published24 Sep 2024, 04:13 PM IST
In value terms, petroleum exports during August 2024 stood at $5.96 billion, down 37.56%.
In value terms, petroleum exports during August 2024 stood at $5.96 billion, down 37.56%.(Bloomberg)

New Delhi: India's petroleum exports saw a steep decline during the first five months of fiscal year 2025 due to lower demand from key markets and disruptions along the supply route, especially in the Red Sea region. 

In value terms, petroleum exports during April-August stood at $31.84 billion, down from $35.30 billion in the same period of the previous year, according to data from the ministry of commerce and industries.

During August, India's petroleum exports registered their steepest monthly fall. In value terms, petroleum exports during August 2024 stood at $5.96 billion, down 37.56% from $9.54 billion reported during August 2023.

As a result of a sharp dip in petroleum exports and a rise in gold imports, India's goods trade deficit widened to a 10-month high in August at $29.65 billion.

Interestingly, while petroleum exports rose during April and May, they have fallen steeply every month since then.

India's petroleum exports reported an 18.3% and 22.5% annual drop in value terms, during June and July, respectively.

"The drop in India's petroleum exports in the last three months (June-August 2024) was mostly due to the Red Sea issue, which led to higher shipping costs and time taken for these exports to reach their required destinations," said Ajay Srivastava, former trade service official and the founder of economic thinktank Global Trade Research Initiative (GTRI).

"This made the low-value and high-volume exports less competitive," he added.

The Red Sea crisis, which began in October 2023, with Iran-backed Houthi rebels disrupting trade in the area, has intensified in recent months.

As a result, container ships carrying commodities are rerouting around the Cape of Good Hope instead of using the Suez Canal, leading to an increase in the cost and time for Indian exporters.

The Red Sea crisis has affected India's overall merchandise trade, which includes exports like petroleum products, textiles, chemicals, auto parts, iron and steel, and rice, among others, which are largely transported through the area. 

Also Read: Why governments are loath to cut fuel prices

Meanwhile, lower demand for petroleum products in India's key markets like Europe has also contributed to a fall in petroleum exports.

However, experts expect the trend to continue.

"Some refinery capacities have come up globally. So, supply seems to be higher than the demand. Also, the demand may have weakened of late due to several factors. The penetration of EVs (electronic vehicles) in Europe has increased which may have somewhat hit fuel demand," said Prashant Vasisht, senior vice president and co-group head of corporate ratings, Icra.

"Going ahead, with expectations of a warm winter in Europe, the tepid demand scenario may continue. Further, because of geopolitical tensions and trade disruptions shipping costs soar so alternate sources may become more economical vis-a-vis India," Vasisht added.

Also Read: Mint Primer: Global crude is at $72. Will petrol prices see a cut?

Crude oil prices have fallen by about 16.71% since 1 April. The price of Brent crude stood at $74.90 a barrel on Tuesday, down 18.40% over the year.

A ministry of commerce and industries spokesperson didn't respond to emailed queries.

 

 

 

Catch all the Industry News, Banking News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates.

MoreLess
First Published:24 Sep 2024, 04:13 PM IST
Business NewsIndustryEnergyIndia’s petroleum exports plunge in first five months of FY25 on lower demand, supply disruption

Get Instant Loan up to ₹10 Lakh!

  • Employment Type

    Most Active Stocks

    Tata Steel share price

    149.70
    07:18 PM | 1 NOV 2024
    1.05 (0.71%)

    Indian Oil Corporation share price

    145.00
    07:19 PM | 1 NOV 2024
    2.3 (1.61%)

    Tata Power share price

    445.20
    07:19 PM | 1 NOV 2024
    5.15 (1.17%)

    Bandhan Bank share price

    183.65
    07:10 PM | 1 NOV 2024
    1.4 (0.77%)
    More Active Stocks

    Market Snapshot

    • Top Gainers
    • Top Losers
    • 52 Week High

    Rainbow Childrens Medicare share price

    1,545.00
    06:59 PM | 1 NOV 2024
    -67.25 (-4.17%)

    ICICI Securities share price

    833.45
    06:59 PM | 1 NOV 2024
    -32.85 (-3.79%)

    Vijaya Diagnostic Centre share price

    966.70
    06:59 PM | 1 NOV 2024
    -30.35 (-3.04%)

    Narayana Hrudayalaya share price

    1,235.60
    06:59 PM | 1 NOV 2024
    -36.75 (-2.89%)
    More from Top Losers

    Brigade Enterprises share price

    1,244.80
    07:19 PM | 1 NOV 2024
    71.75 (6.12%)

    PCBL share price

    432.15
    07:17 PM | 1 NOV 2024
    21.35 (5.2%)

    Piramal Pharma share price

    281.85
    07:17 PM | 1 NOV 2024
    13.45 (5.01%)

    Jubilant Pharmova share price

    1,273.00
    06:59 PM | 1 NOV 2024
    60.65 (5%)
    More from Top Gainers

    Recommended For You

      More Recommendations

      Gold Prices

      • 24K
      • 22K
      Bangalore
      80,565.000.00
      Chennai
      80,571.000.00
      Delhi
      80,723.000.00
      Kolkata
      80,575.000.00

      Fuel Price

      • Petrol
      • Diesel
      Bangalore
      102.92/L0.00
      Chennai
      100.80/L-0.43
      Kolkata
      104.95/L0.00
      New Delhi
      94.77/L0.00

      Popular in Industry

        HomeMarketsloanPremiumMint Shorts