India used the ultra-low crude oil prices earlier this year to top its strategic petroleum reserves with oil at $19 a barrel, saving nearly US$700 million in the process, India’s Ministry of Petroleum and Natural Gas said on Monday.
“Taking advantage of the low crude oil prices in international market, India purchased 16.71 million barrels (mbbl) of crude in April – May, 2020 and filled all the three Strategic Petroleum Reserves created at Vishakhapatnam, Mangalore and Padur,” the ministry said in a statement, quoting Oil Minister Dharmendra Pradhan as telling Parliament in a written reply today.
The average cost at which India bought the crude oil in April and May was $19 per barrel, compared to $60 a barrel oil price in January 2020. Thanks to the cheapest oil in years at the start of the second quarter, India saved US$685.11 million on its crude oil import bill, the ministry said.
India, like the world’s largest oil importer, China, took advantage of the lowest oil prices in decades in April to stock up on crude oil.
As a result, India paid much less for the crude oil imported between April and July 2020 compared to the same period last year, due to the significantly low oil prices and lower import volumes amid decreased fuel demand.
Because of the slump in international oil price benchmarks, India’s crude oil import bill was US$12.4 billion in April-July, the first quarter of India’s fiscal year. For this sum, India imported 57.2 million tons of crude oil, compared to imports of 74.9 million tons worth US$36.2 billion for the same period of 2019, Pradhan told Parliament last week.
Fuel demand in India, which crashed by 60 percent during the initial nationwide lockdown, fell again in August month over month, for the biggest monthly decline since April, as localized lockdowns impacted mobility and economic activity.
India’s oil import volumes could also be a source of concern on the oil market—imports fell in June to the lowest in more than five years, while the imports in July slumped to their lowest level in over a decade amid local lockdowns and refinery maintenance.