Due to the lower demand for petroleum products amid the lockdown to contain the outbreak of the Covid 19, India’s crude oil import is likely to fall by 8.9% in FY21, according to Care Ratings. Since people are likely ‘to be skeptical to travel anywhere any time soon post the lockdown period’, analysts pointed out that consumption of crude oil is likely to fall around 7.3% during FY21, as the refiners will regulate crude processing in accordance to the demand of petroleum products.
Against the projected $111.3 billion (233 million tonnes) for FY20, India imported just $101.4 billion (227 million tonnes) of petroleum within the fiscal, which was 9.4% less than in the year-ago period (in dollar terms).
Imported crude oil caters to around 85% of the country’s requirements, and also import dependency is seen to fall because of the muted demand.
“Refiners have almost stocked abreast of cheap petroleum as directed by the govt but till the lockdown has not completely been lifted there won’t be a big increase in demand for oil products,” Covid 19 because the rating agency noted. India has already ramped up its strategic oil reserves since mid-March in the view of the slump in crude prices and hopes to fill it to the brim by the end of May.
Care Ratings noted that the domestic crude oil production for FY21 is seen to fall by 7.3% as given the sharp fall in oil prices also crude oil explorers will be dissuaded to carry on with exploration.