India’s Crude Imports To See a Dip in May 2021 Due to Falling Demand

The lockdown restrictions imposed by many states across the country are likely to dip in the import of crude oil in May 2021. The second wave of COVID-19 has proved to be detrimental for the various sectors of the economy, and the petroleum sector will be seeing its impact in May 2021. 

In recent months, the lockdown restrictions have been more stringent than last year and have curbed vehicles’ movement to a great extent. These developments have triggered a massive fall in demand for crude oil in the country. The sale of petroleum products was seen to be weak in the first three weeks of May 2021. 

To put things into perspective, the refinery run rate of the Indian Oil Corporation was 96.1% in April, and it had collapsed to 84% in the first week of May 2021. The crude imports rose by 10.3% year-on-year in April 2021, and they touched 18.3 million tonnes. 

In April 2021, the average price of the Indian basket crude was $63.4 a barrel, which was $19.90 a barrel in April 2020. Due to lower global crude prices, in FY 21, the value of crude imports fell by 38% year-on-year to $62.7 billion. This happened despite the import volumes reducing by nearly 13% annually. 

In April 2021, petroleum consumption was reduced to 17 million tonnes, which is the lowest in eight months. The lockdown restrictions have impacted the commercial and industrial consumption of petroleum products, which has reduced the overall demand for crude. 

The diesel consumption fell by 7.5% in April 2021 as compared to March. The petrol sales hit their lowest since August 2021 and were down by 13% compared to the previous month. 

For any clarifications/feedback on the topic, please contact the writer at vineeth.nc@cleartax.in