India’s crude oil imports during December 2023 slipped to their second lowest level during the calendar year due to weak domestic demand coupled with a bearish outlook on diesel consumption in Europe, a key export destination for private refiners.

According to energy intelligence firm Vortexa, the world’s third largest oil consumer imported 4.32 million barrels per day (mb/d) of crude last month, the lowest since September 2023 (4.12 mb/d).

Besides, imports in December 2023 by private refiners, Reliance Industries (RIL) and Rosneft-backed Nayara Energy, fell to its lowest during the last calendar year at 482,000 barrels per day (b/d). Most of the diesel exports from India is from the private refiners.

Imports by public sector refiners also slumped to its second lowest during CY23 at 804,000 b/d in December.

“Lower crude imports into India in December is reflective of refiners’ anticipation of a seasonal demand slowdown domestically as we step into Q1 (2024), potentially further dampened by a bearish demand outlook in Europe, its key export market,” Vortexa’s Head of APAC Analysis, Serena Huang told businessline.

A trade source pointed out that India’s consumption of petrol and diesel has fallen for two consecutive months during November and December, 2023.

Besides, weak manufacturing and construction activity coupled with interest rates and a mild winter is also having a bearing on consumption metrics. This is playing out on Europe, which will have a bearing on export volumes of diesel and gas oil, he added.

Russian imports slump

Another noteworthy feature in the import dynamics last month was the in-bound shipments of crude oil from Russia slipped to their lowest since January 2023. Shipments of Urals also fell to its third lowest at 1.06 mb/d last month.

India’s imports of Russian crude totalled 1.29 mb/d in December, down from 1.56 mb/d in November, Huang said.

S&P Global Commodity Insights said, Indian refinery appetite for Russian crude has slowed in the recent months compared to the first half of 2023. However, it still maintains the position as India’s top supplier with over 35 per cent share of the total imports.

“The recent slowdown can be attributed to a rise in Middle Eastern flows, weather-related issues at Russian ports, heightened refinery maintenance, and increased scrutiny on ships carrying Russian oil,” it added.

Despite the current dip, it is anticipated that inflows are likely to bounce back in the coming months. This resurgence is expected, as crude runs are projected to increase post-maintenance, especially with refining margins remaining robust and a need to meet seasonal demand growth, S&P said.

Last week, Oil Minister H S Puri said that there are no payment problems with Russia, where India buys 1.5 mb/d of crude. The declining imports are more of a function of price (discounts).

More cargoes from Middle East

India continued to import higher volumes of crude oil from its second largest supplier, Iraq, which stood at 964,000 b/d in December compared to 979,000 b/d in November.

An Oil Marketing Company (OMC) official said that Iraqi prices have been competitive. Data from Iraq’s State Oil Marketing Organisation (SOMO) show that Basrah prices in December 2023 averaged at $76.96 a barrel on a provisional basis compared to $82.82 per barrel in November and $87.58 in October.

Imports from Saudi Arabia rose to 707,000 b/d last month from 683,000 b/d in November 2023. Saudi Arabia kept the official selling price of Arab light—a medium sour grade—unchanged in December after increasing it for five consecutive months till November 2023.

“Crude imports/ lifting indications from major Middle Eastern suppliers, Iraq, and Saudi Arabia, have experienced an uptick in the fourth quarter and for Q1 2024. This increase may be attributed to the necessity of fulfilling the current year’s term commitments by public refiners. Typically, refinery purchases can fluctuate by approximately 10 per cent of their term commitment with crude suppliers,” S&P explained.

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