Due to lower demand of petroleum products amid the lockdown to contain the outbreak of the coronavirus, India’s crude oil import is likely to fall by 8.9% in FY21, according to Care Ratings. Since people are likely ‘to be sceptical to travel anywhere any time soon post the lockdown period’, analysts pointed out that consumption of crude oil is likely to fall by 7.3% during FY21, as refiners will regulate crude processing according to the demand of petroleum products.
Against the projected $111.3 billion (233 million tonne) for FY20, India imported just $101.4 billion (227 million tonne) of crude oil in the fiscal, which was 9.4% lower than in the year-ago period (in dollar terms).
Imported crude oil caters to about 85% of the country’s requirements, and import dependency is seen to fall due to muted demand.
“Refiners have almost stocked up on cheap crude oil as directed by the government but till the lockdown has not completely been lifted there won’t be a significant increase in demand for oil products,” the rating agency noted. On top of that, India has already ramped up its strategic oil reserves since mid-March in view of the slump in crude prices and hopes to fill it to the brim by May-end.
Care Ratings also noted that domestic crude oil production for FY21 is seen to fall by 7.3% as ‘given the sharp fall in oil prices, crude oil explorers will be dissuaded to carry on with exploration’.