February oil imports surge as refiners rush to meet rising demand

India’s crude oil imports rose to 4.86 million barrels per day (bpd) in February, the highest since December 2020, preliminary data from trade sources showed, as refiners ramped up runs to meet rising demand for better refining margins.

Oil imports in Asia’s third-largest economy surged 5% from January and 24% from a low baseline in February 2021, when a refinery in Bathinda in northern India was completely shut down for maintenance, data showed.

Indian refiners typically buy oil two months ahead of processing. Refiners increase runs to take advantage of high margins and offset some of the losses incurred by selling fuels in local markets.

Some Indian refiners have also postponed plant maintenance shutdowns to benefit from exports while meeting rising local fuel demand.

Local fuel sales in India, the world’s third-largest oil importer and consumer, have risen since the government lifted restrictions caused by COVID-19 as infections eased.

India, the world’s third largest oil importer and consumer, ships more than 80% of its crude oil needs and is heavily dependent on West Asia.

However, its reliance on West Asia is decreasing as refiners diversify their sources of oil imports to buy cheaper barrels from elsewhere to increase margins, a move that has reduced OPEC’s share of India’s oil imports. Last month, Canada and the United States’ share of India’s oil imports rose 14% to its highest level in a year, while purchases from western Asia have grown at the slowest since October 2021.

The share of African oil rose to a four-month high in February, data showed. Iraq continued to be India’s top oil supplier, followed by Saudi Arabia, the United Arab Emirates and the United States.

Kuwait became India’s fourth largest supplier, ousting Nigeria, which slipped to sixth place, while Canada ranked fifth.

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