India’s crude oil import bill could jump a quarter in 2017-18 on estimates of higher average oil rates after a price collapse sharply brought down payments in the previous two years.
The value of crude import could rise to $88 billion this year from $70 billion in 2016-17, according to the oil ministry’s estimate. In rupee terms, it could rise 22% to Rs 5.75 lakh crore. The estimate assumes crude at $55/barrel and an exchange rate of `65 for a dollar for 2017-18.
In April and May this year, Indian basket of crude came for $52.49 and $50.57, respectively.
In 2016-17, crude import rose 5.4%. The import has been rising for years as local production fails to match expanding consumption.
Total consumption had risen 3.3% in April after falling for three months. India imports more than 80% of its crude oil requirement and a price collapse since mid-2014 has been a gift to the exchequer.
A supply glut has kept crude prices low for three years and conventional producers’ attempts to push up prices haven’t helped much. Last month, the Organisation of Petroleum Exporting Countries (OPEC) and other key producers agreed to extend the agreement to cut production by 1.8 million barrels per day. But this didn’t support prices much.