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India's crude oil imports dropped to 2.82 million b/d in June,
the lowest observed at least since early 2017, according to data by
IHS Markit Commodities at Sea.
Consumption and demand were highly affected earlier this year,
especially during the lockdown, but we have started receiving the
first signals of a quick recovery. India imported 5.14 million b/d
of crude oil in July, up 82% month-on-month and 23% up
year-on-year. This has been the highest recorded so far in
Commodities at Sea, suggesting that the country quickly filled the
gap developed in June. The average of June and July stands
marginally below four million b/d, very close to levels of normal
activity.
High volatility is expected to become the new normal in India's
oil demand, as COVID-19 seems to be highly affecting the
population's habits. Much more people recently started preferring
to commute with their own vehicles, which could be a considered
parameter having an impact on crude oil imports and demand for
fuels. If this trend lasts, crude oil imports could be further
strengthened while the domestic market could potentially absorb
more refined products, keeping clean exports at low levels.
Indian Oil Minister Dharmendra Pradhan expects that fuel demand
in India will rebound to pre-crisis levels by the end of
September.
June's crude oil imports were pushed much lower as several oil
refiners decided to proceed with maintenance. Volumes increased
rather quickly in July, but the risk of more parts of the country
being under local lockdowns and the monsoon rain season could shape
both demand and shipments very differently in August.
Imports of crude oil from both Saudi Arabia and Iraq increased
impressively, with flows from each country surpassing 1.2 million
b/d in July. This has been a massive growth of 154% for Saudi
Arabia and 24% for Iraq month-on-month.
Meanwhile, oil product exports fell further in July, down about
4.6% month-on-month and 21% since last year. This has been
primarily driven by the decline observed in diesel exports. Some
refineries have been under maintenance since late third quarter of
2020.
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