In July, India’s imports of crude oil decreased for the second consecutive month due to lower demand brought on by monsoon rains and lower shipments from Russia and Saudi Arabia as prices increased as a result of recent supply cuts from the two oil exporters.
According to the information posted on the Petroleum Planning and Analysis Cell (PPAC) website on Tuesday, crude imports fell 1.2% month over month to 19.32 million metric tonnes in July. Imports decreased 6.3% year over year as well.
From July of the previous year, imports of oil products decreased 4.8% to 3.56 million tonnes.
“It is a result of lower consumption during the monsoon season, while refinery turnarounds also impacted oil flows,” according to Refinitiv analyst Ehsan Ul Haq.
As monsoon rains limited mobility, India’s fuel consumption, a proxy for oil demand, fell to a 10-month low in July.
“Higher oil prices might have slowed down the appetite to buy elevated levels of crude,” according to UBS analyst Giovanni Staunovo.
In July, India’s imports of crude oil from Russia decreased for the first time in nine months, while imports from Saudi Arabia fell to their lowest level in two and a half years as a result of OPEC+ cuts, according to tanker data from trade and industry sources.
“Narrowing Russian crude oil discounts also resulted in lower appetite for relatively expensive crude,” said Haq. However, Haq added that “crude oil imports should recover soon after the end of the monsoon season and due to the start of the festival season.”
The Indian government raised the windfall tax on petroleum crude earlier this month to stop private refiners from profiting from high refining margins in foreign markets rather than domestic sales.
In July, the nation’s product exports increased 14.3% yearly to 5.36 million tonnes.