Mumbai: Drones which targeted Saudi Aramco’s Abqaiq oil refinery and Khurais oil field, over the weekend, have hit 5% of global oil supply, pushing up global oil prices nearly 12% so far.
While this could push India's import bill upward, potentially exacerbating the current economic slowdown, another concern could be ensuring continuous crude supply to Indian refineries to meet India's oil demand. India is the world’s third-largest oil importer.
Currently, India has the capacity to meet about 12 days’ of the country’s crude oil requirement. While India's strategic oil reserve in Vishakhapatnam has a storage capacity of 1.33 million tonnes, Mangaluru has 1.5 MT, and Padur has 2.5 MT. Indian Strategic Petrol Reserves (ISPRL) is responsible for maintaining the country’s strategic petroleum reserves.
“Indian refiners maintain 65 days of crude storage, and when added to the storage planned and achieved by ISPRL, that takes the Indian crude storage tally to 87 days," said Anuj Gupta of Mumbai-based stock brokerage firm Angel Broking.
State-run oil marketing companies--Indian Oil Corporation Ltd (IOCL), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL)--have said they are closely monitoring the situation.
"Since we have a diversified crude procurement strategy we are currently not worried about crude supplies, however, we are monitoring the situation and are hopeful that normalcy is restored soon," said a senior official from an oil marketing company.
In the current fiscal so far, India has imported 4.5 million barrels per day (mbpd) of crude oil, which is 0.1 mbpd less compared with import volumes in the corresponding period in previous financial year. The compliance of US sanctions on Iran, beginning May, has led to a decline in India’s imports. Iran was India’s third-largest crude oil supplier.
According to the oil ministry, share of crude oil imports from the OPEC (The Organization of the Petroleum Exporting Countries) fell to 78% of total imports during the first four months of FY20 compared with 83.2% during the corresponding period a year ago. On the other hand, India’s crude oil imports from the US rose 213% during the period.
“However, despite the decline of crude imports which is supposed to be considered favourable for the Indian economy, import dependency based on consumption has increased from it being 83.4% to 84.9%," said Care Ratings in its report dated 13 September.
Fall in crude imports has led to a decline in the country’s crude consumption and an increase in overall imports of petroleum products. Crude oil processed by Indian refineries declined 2.3%, while imports of petroleum products rose 22.5%. There has been a sharp increase in petrol and diesel imports, by 298% and 363.5%, respectively, to make up for subdued refining activities.