Weak Fuel Demand Sends India’s Oil Imports To 9-Month Low

Indian refiners imported in June 2021 the lowest volume of crude oil in nine months, as purchases slowed down in April and May when India imposed regional mobility restrictions to curb a resurgence in COVID cases, Reuters reported on Friday, quoting tanker data from trade sources.

India is estimated to have imported around 3.9 million barrels per day (bpd) of crude oil in June, which was down by 7 percent compared to the imports in May.

The June 2021 imports were still higher than in the same month of 2020, when India—and most of the world—was on nationwide lockdown. 

The June 2021 slump in crude oil imports at the world’s third-largest oil importer was not surprising, considering that April and May—the months in which refiners likely nominated oil cargoes for June—saw the peak of India’s COVID crisis, with grim records in daily new cases, hospitalizations, and deaths. The federal government decided against a nationwide lockdown, fearing economic collapse. But the most populous cities and regions were placed under regional lockdowns and various forms of curfew, which dragged down demand for the road transportation fuels gasoline and diesel.

Indian fuel demand plunged by 9.4 percent in April compared to March due to the COVID crisis. Fuel demand in India continued to slump in May, with gasoline sales down to a one-year low and diesel consumption dropping to the lowest in seven months in the first two weeks of May. 

As a result, refiners reduced run rates and nominated less crude for arrival in June as inventories grew. For example, India’s top refiner, Indian Oil Corporation (IOC), had reduced its capacity utilization to 84 percent in the middle of May, compared to 100 percent last November when demand was rebounding. 

In June 2021, Iraq remained India’s top oil supplier, with Saudi Arabia second and the United Arab Emirates (UAE) up four places to take the third spot of India’s largest crude suppliers, the data obtained by Reuters showed.