India imported 21.4 million tonnes (mt) crude oil in January 2024 — the highest in last 20 months — as refiners topped up on cargoes to meet domestic consumption and take advantage of rising demand for refined products in export markets.

According to the Petroleum Planning and Analysis Cell (PPAC), India’s imports last month were the highest since April 2022, when the world’s third largest crude oil importer bought 21.6 mt of the critical commodity, which accounts for more than 85 per cent of its domestic requirement.

Imports grew 8 per cent m-o-m from 19.8 mt, while on an annual basis the in-bound shipments grew roughly 6 per cent from 20.4 mt, PPAC data showed.

India’s crude oil imports started weakening from June 2023 in line with the monsoon, which impacted mobility as well as industrial and mining activity. The inbound shipments again started accelerating from October onwards on the back of the beginning of the festival season and a re-start of mining and construction activity.

Higher imports

Viktor Katona, Kpler’s Lead Crude Analyst, told businessline: “Indian buyers have been having a mixed January when robust domestic demand and an almost complete lack of refinery turnarounds have been sapped by panic buying as the Red Sea disruptions complicated the country’s import options. With freight from the Atlantic Basin being prohibitively expensive again, Indian refiners needed to turn towards options closer to home, leading to the highest ever Iraqi crude imports.”

Kpler pegs India’s imports at 4.8 million barrels per day (mb/d) last month compared to around 4.4 mb/d in December 2023.

Trade sources said that imports of crude oil during February are also expected to be high keeping in view the situation in Middle East and Red Sea. Besides, imports are higher during the first few months as refiners stock up to meet domestic demand and the export market.

Trade sources said that India’s crude imports are largely dictated by its domestic and export demand. “With fog and winter mobility issues behind us, industrial activity and mobility is picking up. The Lok Sabha elections will again drive auto fuel consumption. Besides, export earnings are somewhat hit due to higher risk insurance premiums on Red Sea and also cargoes going through the Cape of Good Hope. This scenario is a key monitorable,” said an official from a domestic refiner.

Exports of refined petroleum products rose 7.5 per cent and 3.1 per cent on an annual basis during January 2024 and April-January period of FY24, respectively. The increase in POL products exports during April-January were mainly due to increase in outbound shipment of aviation turbine fuel, vacuum gas oil and petrol.

Domestic demand

Even though domestic consumption of diesel, the mainstay of the transport and logistics sector, was lower in January 2024, sources said the demand will inch up as industrial, mining and farm activity increases. Besides, some traction will come from March-end onwards as campaigning for the upcoming Lok Sabha elections is expected to lift demand for diesel and petrol.

S&P Global Commodity Insights on Friday said that India’s oil demand is expected to grow by 203,000 barrels per day (b/d) in 2024. Gasoil and gasoline will be the highest contributors to this growth, each having a share of 33 per cent and 31.5 per cent, respectively.

Oil demand is holding up quite well and should continue rising supported by solid economic growth with more focus on industrial and construction activity along with upcoming general elections in the county in 2024, it added.

International Energy Agency on Thursday in its Oil Market Report for February 2024 said: “As in 2023, gains will be dominated by a few key countries, most notably China, and to a lesser extent India and Brazil. The three major economies are set to account for 78 per cent of growth in global oil demand in 2024, that is forecast to reach a new peak of 103 mb/d.”