- March 9, 2020
- Posted by: admin
- Category: Daily News
- At least in the oil sector, the global health emergency posed by the spread of the novel Coronavirus and Saudi Arabia declaring a price war, is coming to India’s advantage.
- India oil import bill is expected to fall by a sharper 10% in FY20 as the increasing spread of Coronavirus and now the fallout of talks between OPEC and Russia has depressed the crude oil prices to about USD30 a barrel now against a high of over USD70 a barrel in Sep 19 and again in Jan 20.
- For FY21, the import bill could slip to half of current levels at USD64bn witnessed in FY16 when crude had fallen to USD26 a barrel for some time.
- According to oil ministry’s Petroleum Planning and Analysis Cell (PPAC), country’s oil imports is projected to fall to 225 million tonnes (mt) in FY20 against 227 mt in FY19 while the import bill would reduce 6% to USD105bn from USD112bn worth of imports in FY20
- However, this calculation is based on average crude price of USD64 a barrel for Apr 19-Dec 19 while the Jan 20-Mar 20 import has been worked on the basis of crude price of USD66 a barrel. It is worth noting that crude oil prices slipped to below USD60 and now around USD30 a barrel from highs witnessed in first week of Jan 20. Analysts say that this would bring big savings on oil imports that generally surge in the later part of the financial year.
- If the price remains around USD30 for most parts of 2020, import bill could reach its all time low in many many years. The potential is it could fall to USD64bn in FY 21, the same as FY16 when crude prices slipped below USD26 a barrel.
- A one dollar fall in crude oil price results in reducing country’s import bill by almost INR29bn while a rupee fall in value of currency against dollar results in increased spending by up to INR27bn.
- “The oil imports bill may well fall below USD100bn as Coronavirus and now the Saudi price cuts may have further dented the oil market. This could bring down country’s oil purchase bill sharply,” said an oil sector expert asking not to be named.
External Link : https://economictimes.indiatimes.com/industry/energy/oil-gas/indias-oil-import-bill-may-halve-if-current-crude-price-holds/articleshow/74548791.cms