India's Oil Exports Affected Due to Crude Oil Price Dip

Petroleum Prices

• Oil prices, which were little changed in early Asian trade on Friday, were on track to end higher for a second straight week following a large cut in U.S. interest rates and declining global stockpiles.

• Brent futures, which were trading 19 cents or 0.3% lower at $73.69 a barrel at 0027 GMT on Friday, gained 4.3% this week. U.S. crude ,which was up 6 cents at $72.01 a barrel, has registered weekly gains of 4.8%. MCX Crude oil prices opened at 5941 with a fall of 0.37%.

Petroleum Demand & Supply

• The decrease in crude oil prices has affected India’s oil exports, resulting in a decline in overall exports in August. According to CRISIL, the scarcity of shipping containers and the US imposition of higher tariffs on Chinese goods are contributing factors.

• Despite these difficulties, robust inflows of remittances and a surplus in the services trade offer some stability.

• India primarily exports petroleum products to various countries, with the Netherlands being the leading destination, followed by Singapore, Australia, and South Africa, as per trade data from the Ministry of Commerce.

• CRISIL has stated that the drop in crude oil prices, which is one of India’s major export items, is impacting oil exports. The report also highlighted that imports have outpaced exports, leading to a widening trade deficit.

• CRISIL also observed a positive start to the fiscal year, with merchandise exports steadily growing in the first quarter. However, export growth slowed in July and August, resulting in an overall contraction. Several factors have contributed to this decline, with a shortage of shipping containers being a key issue disrupting major trade routes.

Petroleum News

• Kirloskar Ebara Pumps Ltd (KEPL) completed the installation of sixteen pump systems for the Paradip-Numaligarh Crude Oil Pipeline (PNCPL), India’s longest crude oil pipeline.

• The 1,630 kilometer pipeline stretches from Odisha’s Paradip Port to Numaligarh Refinery Ltd (NRL) in Assam, supporting NRL’s expansion from 3.0 million metric tons per annum (MMTPA) to 9.0 MMTPA.

• Spanning five states and crossing major rivers using Horizontal Directional Drilling (HDD) technology, the PNCPL project is a critical component of India’s energy infrastructure. It also aligns with the Government of India’s ‘Hydrocarbon Vision 2030 for North East India.’

• As reported by manufacturingtodayindia.com, KEPL’s contribution included high-performance crude oil pumps with advanced features like high torque drives, variable frequency drives, leak detection systems, and monitoring and management systems.

Expert Opinion

The increase in crude oil production in August was primarily driven by a notable rise in crude oil output from the Bonny and Forcados terminals. The volumes of crude oil through both terminals increased to 4.89 million barrels (mbs) and 8.13mbs, respectively, compared to 4.58mbs and 6.81mbs in the previous month. Despite these challenges, the report emphasised positive factors that could help counterbalance the growing trade deficit. India’s services trade continues to exhibit a surplus, and the country is witnessing strong inflows of remittances from overseas workers.