HomeLatestICRA Forecasts Surge in India's Oil Import Bill for FY25

ICRA Forecasts Surge in India’s Oil Import Bill for FY25

India’s oil import bill is poised to witness a substantial surge in the financial year 2024-25, with estimates suggesting a significant rise to $101-104 billion from the previous fiscal year’s $96.1 billion, according to a report by ICRA, a leading domestic rating agency.

This projection is contingent upon the maintenance of prevailing lower levels of discounts on Russian crude purchases amid escalating import dependency. The forecast assumes an average crude oil price of $85 per barrel for FY25. However, any escalation in the conflict between Iran and Israel, coupled with a rise in global crude prices, could exert upward pressure on India’s net oil imports, further inflating the import bill. ICRA’s analysis indicates that a $10 per barrel increase in the average crude oil price could potentially elevate net oil imports by approximately $12-13 billion during the fiscal year, thereby widening the country’s current account deficit (CAD) by 0.3% of the GDP. The agency projects that if the average crude oil price were to surge to $95 per barrel in FY25, the CAD would likely expand to 1.5% of the GDP, compared to the current estimate of 1.2%. Despite these projections, the CAD is expected to remain at comfortable levels, with ICRA estimating a widening to $44-46 billion in FY25, up from $29-30 billion in FY24.

The surge in oil import costs could have ripple effects across the economy, potentially impacting retail fuel prices, consumption patterns, and GDP growth. Elevated crude prices may lead to higher retail prices of petrol, diesel, and aviation turbine fuel (ATF), thereby dampening mobility and consumption growth. India’s reliance on imported crude oil remains significant, with approximately 88% of its requirements being met through imports. Russia has emerged as a key supplier in recent years, offering substantial discounts on crude purchases following its conflict with Ukraine. However, these discounts have narrowed considerably in recent months, from over $30 per barrel to $5-6 per barrel.

Despite the reduction in discounts, Russia remains a prominent player in India’s crude oil imports, with its share rising significantly in recent years. Conversely, imports from West Asian countries have witnessed a decline, reflecting shifting dynamics in India’s oil procurement landscape. ICRA’s projections underscore the evolving dynamics of India’s oil import market and the potential implications for the country’s macroeconomic indicators. As global oil prices continue to fluctuate, India’s energy security and economic resilience remain key areas of focus for policymakers and industry stakeholders alike.

RELATED ARTICLES
- Advertisment -spot_img

Most Popular

Latest News

Recent Comments