Crude inventory hits 1-year high on stronger imports

New Delhi: India's crude oil inventory has rebounded sharply to near a one-year high, as strong imports replenished stocks after the drawdown earlier in the June quarter.

Crude inventories stood at 104 million barrels at the end of June, up from a low of 90.5 million barrels at the end of April, according to estimates by commodity intelligence provider Kpler. The figures include strategic petroleum reserves, commercial inventories and refinery stocks, but exclude crude held in pipelines and on tankers bound for India. India consumes about 5 million barrels of crude a day, meaning current inventories are sufficient to cover roughly 21 days of consumption.

At the end of February, as the Iran war began, India had crude inventories of 107 million barrels, the highest month-end level in 12 months.


As the conflict disrupted import flows, refiners drew down inventories to maintain refinery run rates. India's crude stocks fell to 95.5 million barrels at the end of March and further to 90.5 million barrels by the end of April.

The strategy of maintaining high refinery run rates was aimed at ensuring uninterrupted fuel supplies and avoiding inconvenience to motorists, as any widespread shortages at filling stations could have triggered a political backlash, an industry executive said.

"By and large, there was no disruption or shortage or queues (at pumps)," oil minister Hardeep Singh Puri said on Thursday.

There were, however, some reports of shortages and rationing in a few states, which the government attributed to panic buying, a shift by customers from private-sector fuel stations to outlets run by state-owned companies, and bulk consumers purchasing fuel from retail outlets.

With the closure of the Strait of Hormuz amid the war potentially disrupting about 40% of India's crude supplies, refiners scrambled to secure alternative cargoes from across the world, showing a willingness to pay a premium to source crude wherever it was available. Ample availability of Russian crude following the US sanctions waiver helped cushion the disruption, and India's decline in crude imports was not dramatic.

Crude imports fell 14% to 4.47 million barrels per day (mbd) in March from 5.2 mbd in February. They marginally increased to 4.54 mbd in April before recovering to 4.96 mbd in May, according to Kpler. In June, imports totalled 4.93 mbd.

With an interim deal between the US and Iran now in place and transit through the Strait of Hormuz partly restored, crude supply is no longer seen as a major concern.

"All our vessels are through," Puri said, referring to ships that had been delayed in the Persian Gulf over the past few months. "We are now in a situation where it's not problematic."