India's oil imports hit record high in September

The world’s third-biggest oil importer shipped in 4.2 percent more oil last month than a year earlier and about 19 percent more than in the previous month, ship-tracking data from industry sources and Thomson Reuters Analytics showed.

“There was heavy maintenance at some refineries in July-August. All those refineries have come online, so naturally refiners will have to boost purchases to meet local demand,” said Senthil Kumaran, senior analyst at energy consultant FGE.

Maintenance turnaround at some refineries led to Indian Oil Corp deferring the shutdown of its 300,000 bpd coastal Paradip refinery to April-March. 

During the first nine months of the year India’s oil imports rose 1.8 percent to about 4.4 million bpd, with most supplies coming from the Middle East, followed by Africa and Latin America.

Indian fuel demand typically eases in the third quarter as monsoon rains hit construction, industrial activity and reduces consumption of transport fuels. That provides refiners with an opportunity to carry out maintenance.

Capacity addition is also driving up India’s oil imports.

The country added 170,000 bpd of capacity at plants owned by Bharat Petroleum Corp and HPCL-Mittal Energy, which are gradually ramping up crude runs.

India, which imports about 80 percent of its oil needs, has emerged as a key driver for growth in global oil demand.

The South Asian nation is set to surpass China as the fastest-growing oil products market in Asia, with fuel demand growing by 6.1 percent in 2018, according to a recent report by the U.S. Energy Information Administration.

FGE expects India’s fuel demand to rise by about 4.5 percent this year to 4.2 million bpd and by 5.1-5.2 percent in 2018.

India is increasing refining capacity to keep pace with the expected growth in fuel demand as Prime Minister Narendra Modi seeks to boost the manufacturing sector.

Global oil majors Saudi Aramco, Rosneft, BP, Shell and Total are vying to tap a sizeable share of the fast-growing Indian fuel markets.

OPEC expects India’s oil demand to rise by 150 percent to 10.1 million bpd by 2040 from about 4 million bpd.

India’s fuel demand is also expected to rise in the fourth quarter because new tax rules have made two-wheelers and cars cheaper, said Kumaran.