India may cut oil imports as crude prices rise, rupee struggles

India, which is 81% dependent on imports to meet its oil requirements, is looking at reducing oil purchases to control growing crude oil prices and declining rupee. India is the third largest importer of crude oil and rising international crude oil prices are inflating domestic transport fuel rates in a strong demand environment.

Indian Oil Corp (IOC) Chairman Sanjiv Singh on Monday told news agency PTI that refiners maintain 7-8 days of inventory in tankages besides carrying stocks in pipelines as well as ships in transit. They are planning to cut these so that monthly imports of crude oil can be reduced.

"We had a meeting last to last Saturday (September 15) to deliberate on a host of issues facing the industry and at that meeting, one of the options that was considered was to reduce imports by cutting down on inventory levels," Singh said.

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An important factor guiding the decision was also Asian Premium climbing to as high as $3-5 per barrel in last 3-4 months, he said.Asian Premium is extra charge being collected by oil-cartel OPEC countries from Asian countries when selling oil in comparison to western countries.

"Reducing inventory levels and imports are being considered as temporary measures without impacting fuel supply in the domestic market," he said. "This decision would in no way be allowed to impact supplies of petroleum products in the domestic market. Our commitment to meet domestic supplies remains supreme."

Fuel prices in India continue to surge on Monday pushing the petrol price to cross the Rs 90-mark per litre in Mumbai, while diesel stood at Rs 78.58 per litre in the financial capital, rising by 11 paise per litre and 5 paise per litre respectively. While in Delhi, the petrol price touched Rs 82.72 per litre and diesel was priced at Rs 74.02 per litre on Monday.

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The rupee fell sharply by 29 paise to 72.49 against the dollar on Monday.Forex dealers said the greenback's strength against other currencies overseas, after reports that China had cancelled upcoming trade talks with the US, weighed on the Indian rupee.

(With PTI inputs)