India’s crude Oil demand

India’s crude Oil demand

Sub: Eco

Sec: External Sector

• Rising Oil Import Dependency:
  • India’s reliance on imported crude oil has increased to 88.3% in the first four months of FY25 (April-July 2024).
  • This is up from 87.8% during the same period last year.
• Domestic Oil Production vs. Demand:
  • Despite efforts to boost domestic production, India’s self-sufficiency in crude oil has declined to 11.7%.
  • Domestic crude oil production was 9.5 million tonnes, while total domestic consumption of petroleum products rose to 80.9 million tonnes.
• Impact on the Economy:
  • High import dependency makes India vulnerable to global oil price volatility, affecting the trade deficit, foreign exchange reserves, and inflation.
  • The gross oil import bill for April-July 2024 increased by 17% year-on-year to $49 billion.
• Government’s Efforts and Challenges:
  • The government had set a target in 2015 to reduce oil import dependency to 67% by 2022, but this goal has not been met, and the dependency has grown instead.
  • Efforts to reduce reliance on imported oil include promoting electric mobility, biofuels, and incentivizing domestic oil exploration and production.
  • However, these measures have not been sufficient to offset the growing demand for petroleum products.
• Continued Demand Growth:
  • India’s domestic consumption of petroleum products rose by 4.8% year-on-year, reflecting strong demand, particularly for transportation fuels like petrol and diesel.
• Significance of the Issue:
  • The continuous increase in oil import dependency is a significant concern for India’s energy security and economic stability.