The Indian crude basket hit $123.29 per barrel last week, approaching levels recorded in March 2012, and adding 86% to the price Indian oil marketing companies pay, local media have reported, also noting the effect of a cheaper rupee.
Since Indian companies pay for the oil they buy from abroad in U.S. dollars, a weaker Indian currency swells the bill further. The combination of a war premium on international oil prices and a weak rupee caused Indian fuel marketers to lose money despite the increase in gasoline and diesel prices, the Financial Express reported today. Citing investment bank Elara Capital, the publication said Indian state refiners’ diesel and gasoline margins have both swung into the red.
Meanwhile, India’s crude oil import bill rose to $90.6 billion over the third quarter of the year, which represented an increase of almost $29 billion from a year earlier. In volume terms, however, oil imports only inched up by less than 1%, to 122.7 million tons.
Even so, India’s crude oil imports from the Middle East specifically rebounded in September to pre-war levels amid higher volumes exiting the Persian Gulf, while competition from China for Russian oil resulted in declining imports from Russia.
India’s crude oil imports from the Middle East jumped to 2.8 million barrels per day last month, up by 32% compared to August and the highest level since February, vessel-tracking data compiled by Reuters showed last week. Russian imports, meanwhile, remained the biggest part of India’s total crude imports, despite a price-related hit on demand.
That hit on demand for Russian crude was related to higher shipping costs prompted by a tanker squeeze due to the acceleration in ship-to-ship transfers in the Persian Gulf amid the Iranian blockade on the waterway. Those higher costs are forcing producers to discount their crude in order to find buyers.
By Irina Slav for Oilprice.com
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