India spent $74.8 billion on crude oil imports from April to August 2023, reflecting a 48.4% increase compared to the same period last year. This increase in costs occurred despite a 0.4% decrease in crude oil import volumes, which reached 100.7 million tons over these five months.
Reasons for the Increase in Oil Import Costs
The rise in international oil prices, particularly due to tensions and conflicts in the Middle East and a reduction in oil flows from this region, has been the main factor behind the increase in India's oil import costs. Crude oil prices in the global market are influenced by various factors, including political and economic fluctuations. For instance, since the start of the war in Ukraine and the closure of the Strait of Hormuz, the cost of transporting oil has increased by 400%.
Impact on Crude Oil Prices in India
This year, especially in the second quarter, India spent 60% more on crude oil imports compared to last year. With the increase in global oil prices reaching $100 per barrel, India's average crude oil import cost was $114.80 per barrel. This rise in costs, despite a slight decrease in import volumes, has put additional pressure on India's economy.
India's crude oil basket includes an average of sweet and sour crude oils that are purchased monthly by Indian refineries. This basket includes Dated Brent crude and the average of Oman and Dubai crude. Given the fluctuations in global prices, this basket is affected and can influence production costs and domestic prices.
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