Indian refineries to reduce crude oil imports in May due to second wave

With the second wave of coronavirus pandemic raging across India, its full impact will reflect in reduced crude oil imports by refineries for May, according to S&P Global Platts Analytics.

This assumes significance given that India is a key refining hub in Asia, with an installed capacity of over 249.36 million tonnes per annum (mtpa) through 23 refineries. The fuel demand in India has again dipped with several states imposing lockdowns in the world’s third-largest oil importing nation.

“India’s crude imports and refinery runs remained robust in April as refiners shipped in cargoes contracted earlier and refrained from backing out of deals despite a second wave of COVID-19 triggering demand destruction fears. Analysts, however, said the full impact of the crisis will get reflected only in May numbers,” S&P Global Platts said in a statement.

The country’ largest refiner state run Indian Oil Corporation Ltd (IOC) last week said its capacity utilization, which had reached 100% in last November, has come down to 84%, as states across the country have imposed lockdowns. Energy consumption, especially electricity and refinery products, is usually linked to overall demand in the economy.

“Just like last year, India’s refiners had been slow to respond as crudes were bought in advance.