Indian oil marketing companies are turning to their commercial crude inventories due to tightening supply chains following the closure of the Strait of Hormuz amidst rising tensions in West Asia. The ongoing US-Israel conflict with Iran has led to supply constraints from the Gulf region, along with increased freight charges, insurance premiums, and transit durations, as reported by NDTV Profit.
Despite the escalating costs, robust domestic fuel demand has prevented oil marketing companies from fully passing on the burden to consumers. India’s import bill for crude and petroleum products decreased by 36% year-on-year to $12.18 billion in March, down from $19 billion in the same period last year.
Procuring crude from non-Gulf sources has become more costly due to global competition for limited alternative supplies. The decline in import costs was primarily driven by a significant drop in import volumes rather than a decrease in prices. Monthly crude imports are estimated to have nearly halved to around 3 million barrels per day from 6.38 million barrels per day a year ago.
