India's Crude Oil Imports Dip to 13-Month Low Amid Maintenance and Market Volatility

Key Takeaways

• Crude oil futures rose after OPEC+ delayed production output increases by a month.
• January Brent futures reached $74.31, and WTI rose to $70.72.
• India's October crude oil imports declined by 7.6% due to refinery maintenance and West Asia's geopolitical tensions, impacting volumes from key suppliers.
• Imports are expected to rebound in November, with early data indicating high cargo arrivals, especially from Russia and Iraq.

Crude Oil Price Movement and Market Response

• Crude oil futures rose on Monday morning after the OPEC+ (Organization of the Petroleum Exporting Countries and its allies) decided to delay production output increase by a month.
• January Brent oil futures were at $74.31, up by 1.66 per cent, and December crude oil futures on WTI (West Texas Intermediate) were at $70.72, up by 1.77 per cent.
• November crude oil futures were trading at ₹5,955 on Multi Commodity Exchange (MCX)during the initial hour of trading on Monday against the previous close of ₹5,988, down by 0.55 per cent, and December futures were trading at ₹5,933 against the previous close of ₹5,966; down by 0.55 per cent.

Oil Demand & Supply: October Decline and November Rebound Expectations

• India’s crude oil imports in October declined to a 13-month low amid maintenance-related shutdowns at some refineries and the geopolitical crisis in West Asia which led to fears of high volatility in international oil prices. Consequently, import volumes from the top five suppliers — Russia, Iraq, Saudi Arabia, the United Arab Emirates, and the United States — declined sequentially, according to ship tracking data.
• In October, Indian refiners cumulatively imported 4.35 million barrels per day (bpd) of crude, down 7.6 per cent month-on-month, according to provisional vessel tracking data from international commodity market analytics firm Kpler. Going forward, industry watchers expect oil imports to rebound in November as all Indian refiners would be fully back on stream amid robust demand and expectations of relatively limited oil price volatility in the international market.
• Supplies from Russia—India’s largest source market for crude—fell 9.2 per cent sequentially to a seven-month low of 1.73 million bpd, accounting for almost 40 per cent of India’s total oil imports in October. In addition to refinery maintenance season and oil market volatility, competition from Chinese refiners for certain grades of Russian crude played a role in the decline in oil imports from Moscow.
• Oil import volumes from Iraq and Saudi Arabia were sequentially lower by 3.3 per cent at 0.84 million bpd and 10.9 per cent at 0.65 million bpd, respectively.

Petroleum News: Impact of Geopolitics and Refinery Maintenance on Crude Imports

• Going by initial indications and oil tanker movements, India’s oil imports are expected to rebound in November. Vessel movements indicate that oil cargo arrivals at Indian ports in the first two weeks of November could be around 5 million bpd, significantly higher than the October volumes.
• Despite the decline in overall import volumes of Russian oil in October, shipments of the country’s flagship crude grade—the medium-sour Urals—were at a four-month high in October. Urals is also the mainstay of India’s Russian oil purchases, and accounts for over three-fourths of Russian oil imported by Indian refiners. Imports of some other Russian crude grades, however, declined and led to the overall slide in imports.
• As the world’s third-largest consumer of crude oil with a high import dependency level of over 85 per cent, India is extremely sensitive to oil prices. Although trade sources have indicated that discounts on Russian crude have shrunk over time, Indian refiners have evidently remained keen on buying Russian oil as given the high import volumes, even lower discount levels lead to significant savings.

Expert Opinion: India’s Continued Focus on Russian Oil Supplies

• India’s crude oil imports are expected to rebound in November as refiners return to full operations and demand remains strong. October saw a decline due to refinery maintenance and geopolitical concerns, with imports from Russia, Iraq, and Saudi Arabia sequentially lower.
• However, early November projections indicate oil cargo arrivals could reach around 5 million barrels per day, with Russian imports expected at 1.8-1.9 million bpd and Iraqi imports around 900,000 bpd. Despite smaller discounts on Russian crude, Indian refiners continue favoring these purchases for cost savings, underscoring India’s sensitivity to oil prices given its high import dependency.