Officials at state-run oil refiner-fuel retailers said their dollar requirement grew about 40-45% sequentially in the first half of the year compared to the second half of 2021, but declined to share numbers. .
Allaying fears of any dollar shortfall, he said, apart from revolving credit for crude oil purchases, companies also have limits available for capital expenditure under the additional dollar window opened in 2018.
Officials said increased demand for the fuel amid higher oil prices has increased their foreign exchange requirement. “We are buying more barrels to maintain supply in the market. In June, we also imported diesel to meet the increase in demand. At today’s high prices, it takes more dollars to pay for them than it did six months ago,” said an industry executive requesting anonymity.
In 2021-22, oil companies spent $144 billion on imports of about 212 million tonnes (mt) of crude oil and 40 million tonnes of products. Oil prices have been rising since October 2021, but intensified after the Russia-Ukraine conflict on February 24, reaching a 14-year high of $139 a barrel on March 7. The price is hovering around $107.
Data from the Ministry of Oil shows that the overall demand for the products has increased by 17.9%. Segment-wise, petrol consumption has grown by around 23 per cent, diesel by 24 per cent and jet fuel by about 130 per cent as compared to a year ago.
Rising demand makes India vulnerable to high oil prices as the country meets 85% of its crude oil requirement through imports. Higher oil prices weaken the rupee by eliminating the forex kitty as more Indian currency is needed to buy every dollar.
As the rupee strengthens, imports of raw materials become costlier. this effect India Inc.Profitability due to increased cost of production leads to higher inflation as goods and services become more expensive and finance becomes difficult for the common man.
India is the world’s third largest oil consumer and is expected to be a major driver of demand growth by 2030, with consumption growing at 5-6% annually.