Bigger bill for India’s oil imports as crude turns costlier

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As international oil prices soar, India is set to bleed more in FY 2018. India which meets 80% of its oil needs through imports could end up shelling out 25% extra in the next fiscal.

The country had imported 213.93 mt of crude in 2016-17 at Rs. 4.7 trillion.

With a hike of 25% on cards the import bill is expected to touch Rs.5.65 trillion for crude of 219.25 that the country is likely to buy as per the data of the oil ministry’s Petroleum Planning and Analysis Cell (PPAC) during the period.

India imported 195.7 mt of crude oil for US$63.5 billion in the current fiscal (April 2017 to February 2018) period. Crude oil averaged US$46.17 in 2015-16, increased marginally to US$47.56 per barrel in 2016-17 and shot up to US$55.74 a barrel in the April 2017 to February 2018 period. Currently for the month of March crude prices are hovering around $65 a barrel at an exchange rate of Rs.65 a US dollar as per PPAC.

The fluctuation in dollar inflates the import bill and the same applies for currency exchange rate fluctuations. India’s crude oil production during April 2017 to February 2018 period was below expectation. The country produced 32.6 million (mt) tonnes during this time frame. The production was 36 mt in 2016-17 and 36.9 mt in the previous fiscal.

Consumption on the other hand has been rising steadily from 184.7 mt in 2015-16 to 194.6 mt in 2016-17 to 186.2 mt in the first 11 months of 2017-18, as per PPAC.

The recent development spells bad news for the end customer and the general public who will soon find that oil is making holes in their pockets.