India saw a steep fall in earnings from exports of refined petroleum products in the nine months from April to December 2023 due to declining crude prices, a rise in domestic consumption, and shrinking discounts on Russian oil.
According to data from the government’s Niryat portal, exports of chemicals and petroleum products stood at $59.16 billion in April-December 2023, down 12.54% from $67.64 billion in the year-ago period.
In April to December 2021, India’s export value of chemicals and petroleum products amounted to $44.28 billion.
Earnings from exports to Europe, North America and CIS region rose but not enough to balance out declines in shipments to South America, West Asia-North Africa (WANA), South Asia, ASEAN and North East Asia.
The price of Brent crude, which stood at $79.88 a barrel on Tuesday, has declined 8.42% in the last year.
A commerce ministry spokesperson didn’t respond to emailed queries.
India imports more than 87% of its petroleum requirements despite being a key refining hub in Asia, with an annual installed capacity of 250 million tonnes across 23 refineries.
It exports refined petroleum products across the world.
Since early 2022, India’s oil imports have been boosted by discounted oil from sanctions-hit Russia.
From April to September 2023, India imported on average 1.76 million barrels per day (bpd) of Russian oil, more than double the 780,000 bpd it imported in the year-ago period.
With discounts on Russian crude oil shrinking, the volume of shipments from Moscow has also fallen in the past months.
However, despite a 4.5% decrease in imports from October, Russia remained India’s leading oil supplier in November, according to data from the Union ministry of commerce and industry.
During November, the $3.61 billion worth of crude imported from Russia accounted for 30% of India’s total $11.86 billion oil imports.
The fall in crude oil prices, which also impacts prices of other petroleum and chemical products, is one of the main reasons for the falling export earnings from petroleum and chemical products, said Prashant Vashisht, vice-president of Corporate Ratings at ICRA.
“The crude prices are currently not at the same level as last year, mainly due to disappointment around China’s economic recovery,” Vashisht added.
Meanwhile, India’s petroleum product consumption during April-December 2023 rose 4.9% annually to 172.7 million metric tonnes (MMT), up from 164.60 MMT in the same period of the previous year, according to data from the oil ministry’s Petroleum Planning and Analysis Cell (PPAC).
During FY23, global crude oil prices soared to a record $130 a barrel following the Russia-Ukraine war, which sparked widespread supply concerns.
However, benchmarks Brent crude and US West Texas Intermediate slipped more than 10% in 2023 to close out the year at their lowest year-end levels since 2020.
In January so far, the Indian crude oil basket has averaged $77.85 per barrel, compared to $83.76 in April 2023.
The US Energy Information Administration (EIA) in its latest projection has said global demand for liquid fuels will be lower over the next two years, with consumption in 2024 and 2025 likely to grow by 1.4 million barrels per day (mb/d) and 1.2 mb/d, compared to 1.9 mb/d growth in 2023.
Source: Livemint