The price of the Indian crude oil basket reached $123.29 per barrel, close to its highest level since March 2012. This increase has added 86 percent to the price of oil that Indian oil companies pay. Following this price increase, Indian oil companies have faced serious challenges due to the depreciation of the Indian rupee.
Impact of Rupee Depreciation on Oil Costs
Indian companies must pay for oil purchases from global markets in dollars. The depreciation of the rupee makes the cost of buying oil higher, which has severely negatively impacted the profit margins of these companies. According to experts, the combination of war risk premiums on international oil prices and the weakness of the rupee has led Indian fuel marketers to incur losses despite rising gasoline and diesel prices.
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Increase in Crude Oil Import Costs and Market Changes
In the third quarter of this year, India's crude oil import costs reached $90.6 billion, an increase of nearly $29 billion compared to last year. However, in terms of volume, oil imports increased by less than 1 percent, reaching 122.7 million tons. In September, India's oil imports from Middle Eastern countries reached 2.8 million barrels per day, a 32 percent increase compared to August, marking the highest level since February.
Oil imports from Russia continue to constitute a significant portion of India's total oil imports; however, demand for Russian oil has been affected by rising transportation costs. These increased costs have arisen due to restrictions on oil transfers in the Gulf and Iranian blocks. This situation has forced producers to offer their oil at discounts to find buyers.
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