new Delhi. Crude oil is still running above $100 amidst the ongoing tension between Russia and Ukraine (Russia-Ukraine Crisis). Rapid increase in crude oil will not only increase inflation, but it will also increase the country’s import bill. India’s crude oil import bill may cross the $100 billion mark in 2021-22. This will be almost double the expenditure on crude oil imports in the last financial year.
In fact, international crude oil prices have reached a seven-year high. According to data from the Petroleum Planning and Analysis Cell (PPAC) of the Ministry of Petroleum, India has spent $ 94.3 billion on crude oil imports in the first 10 months (April-January) of 2021-22. In January alone, $11.6 billion has been spent on crude oil imports. In January last year, $7.7 billion was spent.
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import bill will be doubled
Crude oil prices crossed $100 per barrel in February. In such a situation, it is estimated that by the end of the current financial year, India’s oil import bill will double to reach $ 110 to 115 billion. India meets 85 percent of its crude oil requirement through imports.
Country has additional refinery capacity
Imported crude oil is converted into value-added products such as petrol and diesel for vehicles and other users at oil refineries. India has surplus refining capacity and exports some petroleum products, but the production of LPG is less here, which is imported from countries like Saudi Arabia.
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$19.9 billion in imports in 10 months
According to the data, the import of petroleum products in the first 10 months of April-January of 2021-22 has been 33.6 million tonnes or $ 19.9 billion. On the other hand 51.10 million tonnes of petroleum products worth $334 billion were exported. India spent $ 62.2 billion on importing 196.5 million tonnes of crude oil in 2020-21. At that time, the global crude oil prices had come down due to the pandemic. India has already imported 175.9 million tonnes of crude oil in the current financial year. Before the pandemic, for the financial year 2019-20, the world’s third largest energy importer and consumer country, India, spent $ 1014 billion on importing 227 million tonnes of crude oil.
That’s why the crude reached $ 100
Brent spot prices hit a seven-year high of $105.58 a barrel after Russia’s attack on Ukraine. However, energy has been kept out of the sanctions imposed by Western countries on Russia. Due to this, the price of oil came down to below $100 per barrel.
Increased dependency due to decline in domestic production
Macroeconomic prospects are affected due to high imports of crude oil. Due to the continuous decline in domestic production, India’s dependence on imports has increased. The production of crude oil in the country was 30.5 million tonnes in 2019-20, which came down to 29.1 million tonnes in the next year. In the first 10 months of the current financial year, India’s crude oil production stood at 23.8 million tonnes, compared to 244 million tonnes in the same period of the previous financial year.
Tags: Crude oil, Crude oil prices
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