India's Crude Import Bill Rises 61% Despite Buying Less Oil Amid West Asia Tensions

India's crude oil import bill surged 61% to $49.8 billion in the April-June quarter even as the country bought less oil with volumes falling 4% to 59.8 million tonnes from 62.6 million tonnes a year earlier, according to the data from the Petroleum Planning and Analysis Cell (PPAC).

Crude stayed above $100 a barrel through much of the quarter, driven by the US-Iran war and the disruption to West Asian supplies caused by the Strait of Hormuz blockade. In June alone, import volumes fell 7% to 18.9 million tonnes from 20.3 million tonnes, but the import bill still surged 48% to $14.7 billion, PPAC data shows.

India meets more than 85% of its crude needs through imports and is the world's third-largest buyer.

The Price Arc That Explains the Bill

The quarter's numbers were shaped by an oil market in constant motion. Brent crude dropped to around $90 on April 17 after the US and Iran announced a temporary ceasefire, then climbed to $126.41 on April 30 as fears of renewed hostilities returned which was a $36 swing in 13 days.

The monthly average for April settled at around $117 a barrel. In May, prices stayed above $110 through the first half before falling to $92.05 by the end of the month as peace signals emerged again.

India's average crude import price, per PPAC data, came in at $114.48 a barrel in April, $106.23 in May and $83.22 in June, reflecting the gradual easing as the quarter progressed.

However, that easing may not last. The new tensions around the Hormuz Strait again raised concerns about disruptions of shipping and higher oil prices, according to analysts, cited by Moneycontrol.

Brent was trading near $89 a barrel on July 21 as the United States and Iran expanded attacks overnight, reigniting concerns over Hormuz shipping. A fresh escalation could push Brent back toward $90 to $95 a barrel from around $75 following the first ceasefire.

The stakes are significant. India imports roughly 1.8 to 2 billion barrels of crude annually and every additional dollar per barrel in price adds up to $2 billion to the country's annual import bill.

Although, the bigger risk for India, analysts note, is not crude availability but persistently higher landed prices that could widen the current account deficit and weight on the broader economy.

Russia Fills the Gap

With West Asian supplies disrupted, India's purchases of Russian crude hit a record high in June, rising 34% month-on-month, according to data from the Centre for Research on Energy and Clean Air, a European think tank.

India purchased €4.5 billion of Russian crude in June, marginally down from €4.8 billion in May.

India was the second-largest buyer of Russian fossil fuels in June, taking in a total of €5.5 billion, or $6.28 billion, of Russian hydrocarbons. Crude oil accounted for 83% of that at €4.5 billion, or $5.14 billion, with oil products contributing €488 million and coal €444 million.