India’s oil market is falling behind its fellow Asian refiners in case of recovering from the COVID-19 outbreak has caused. Both crude imports and refinery runs for the month of May at below-average levels as the country remains under lockdown. The country imported 4.1-4.2 million barrels per day as it expects recovery in quarter 2 for this financial year.
Comparing crude arrivals into Asia’s top four refining centres established at China, India, South Korea and Japan were at their all-time high levels of 21.8 million barrels per day boosted by record-high inflows to china and South Korea. The high record arrivals in these two countries are due to opportune timing as the recovery from COVID-19 came around same time when the oil prices were collapsed initially and when OPEC and Russia flooded the market with oil with negligible demand and fought for market share.
For India, the timing was not in its favour as when the price war erupted, India was witnessing the worst of corona virus. Its refiners from both state enterprises and private firms were the first to volunteer for extra barrels that the Middle Eastern members of OPEC were offering. This led to near all time high imports for each of the three months.
As COVID-19 exploded in the country and shutdown was announced, with all the transportation as well as economic and industrial activities cut down. Demand for essential commodities rise cutting the demand for refined products, such as diesel,oil, gasoline and jet fuel as refining margins all over the world are crushed.
Refinery production which was at 90 per cent from January to March dropped to low record of 71.4 per cent for April. Only about a third of the country’s requirement of 5 million barrels per day capacity has slashed output by cutting runs by about 1.4 million barrels per day.
To overcome with the sudden surplus production of crude, the Indian government decided to move the extra barrels into its strategic petroleum reserves with its entire 36.87-million-barrel capacity. Oil Minister claimed that India is looking forward to store some low-priced US oil in domestic facilities which are tend to occupy the storage.
As parts of the country emerges from lockdown, the demand for crude and refinery runs is expected to pick up in June but full recovery still looks far-off.