India’s Crude Import Costs Climb Nearly 50% Despite Falling Volumes

India spent $24.4 billion more on crude oil purchases between April and August than it did in the same period a year earlier, according to government figures released Tuesday, as international price increases outweighed a modest drop in the volume of barrels the country imported.

The Oil Ministry’s Petroleum Planning and Analysis Cell (PPAC), the agency that tracks the nation’s petroleum economics, put the five-month import bill at $74.8 billion — a 48.4% increase year-over-year — even as import volumes slipped 0.4%. The figures were cited by Indian media.

India is the world’s third-largest crude consumer and imports the vast majority of the oil its refineries process, so swings in global benchmark prices flow quickly into the country’s trade balance. The April–August window captured the price volatility that followed the outbreak of the war in Ukraine and disruption to shipping and trade flows involving Russian and Middle Eastern barrels, which reshuffled sourcing patterns for Asian refiners.

The divergence between value and volume is notable: essentially flat or slightly lower physical demand still translated into a bill that rose by nearly half. That dynamic squeezes import-dependent economies and can feed through to fuel prices, inflation, and subsidy costs for state-run retailers who sell petrol and diesel at government-influenced prices.

Shipping and tanker demand is one channel through which shifting trade routes affect listed energy companies. International Seaways, Inc. (INSW), a crude and product tanker operator, traded at $104.85 in recent activity, up 0.51% from its prior close of $104.31, with a market capitalization of roughly $5.19 billion. Tanker operators’ fortunes are tied to ton-mile demand — the distance cargo travels — so rerouted barrels that travel farther to reach Asian refiners can lengthen voyages and affect fleet utilization across the industry.

For India, the PPAC data underscore the sensitivity of the country’s energy security to global price cycles. New Delhi has in recent years diversified its supplier base, including purchases of discounted Russian crude, while pushing domestic exploration and ethanol blending programs to reduce import dependence over the long term.

What to watch

• Monthly PPAC updates for subsequent import bill and volume trends as benchmark prices fluctuate.
• India’s trade balance and currency data, which are affected by energy import costs.
• Tanker rate and utilization trends, including upcoming earnings from operators such as INSW, as trade route shifts persist.

Source: original release