Petroleum exports drop sharply as West tightens squeeze on Russia
- According to data from the government’s Niryat portal, earnings from exports of chemicals and petroleum products stood at $67.11 billion in the April-January FY24 period
NEW DELHI: Earnings from petroleum shipments fell steeply in April-January FY24 due to the global economic slowdown, a rise in domestic consumption, and shrinking discounts on Russian oil.
India had expanded its export markets for refined petroleum products during the last financial year.
According to data from the government’s Niryat portal, earnings from exports of chemicals and petroleum products stood at $67.11 billion in the April-January FY24 period, down 11.29% from $75.65 billion in the year-ago period.
Earnings from exports to Europe, and the CIS region (republics of the former Soviet Russia) rose but not enough to balance out declines in shipments to Africa, West Asia-North Africa (WANA) and South America.
The price of Brent crude stood at $82.99 a barrel on Monday, up 1.07% over the year.
Following Russia’s invasion of Ukraine in February 2022, the West imposed sanctions on Russia, forcing it to cut oil prices.
India emerged as a leading buyer of discounted Russian crude oil and an important exporter of refined petroleum products to Europe.
During FY 23, Indian petroleum exports rose sharply to regions like Africa, West Asia-North Africa and South America, apart from Europe, on the back of the South Asian country’s access to discounted Russian oil and volatility in Brent crude prices globally amid economic and geopolitical uncertainties.
Earnings from exports of chemicals and petroleum products rose 43.67% annually to $91.17 billion during FY 23. However, data shows these earnings have declined during FY24 with discounts on Russian crude oil shrinking, higher domestic consumption and slow global growth leading to lower energy consumption in some advanced economies.
“The growth in domestic consumption (of crude oil) has risen since 2023, which could have impacted in lower exports,” said Prashant Vashisht, vice-president of corporate ratings at ICRA. “Also, with the global economy not being in a very good shape, energy consumption, especially in Europe, has been lower,” he added. With an annual installed capacity of 250 million tonnes across 23 refineries, India is one of the largest oil refiners and exporters, despite importing most of its petroleum requirements. According to Reuters, India’s crude oil imports from its top supplier Russia fell for a second straight month in January to its lowest in a year amid tighter western sanctions.
The world’s third-biggest oil importer and consumer boosted imports of Iraqi oil to offset the drop in Russian oil imports, it added. Data from LSEG and Vortexa showed a 4.2% and 9% decline in India’s monthly intake of Russian oil in January from the previous month.
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First Published:19 Feb 2024, 06:47 PM IST
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