Section C Group 3

Ishika Jain – 21020841114

Shamayita Das - 21020841133
Sweekruti Mohanty - 21020841142
Nandan Kirtane – 21020841118
Ashish Prasad - 21020841108

1. Demand and Supply Trends

World Oil Demand
Due to the continuous rise in number of COVID 19 cases in USA and Europe during
October, Governments were forced to bring restrictive measures in form of transportation. As
a result, the expectation of recovery in oil demand were diminished and even after long time
since the first COVID-19 case was discovered, world oil trade is still suffering. According to
OPEC Total world oil demand shows a reduction of 9.78% annually as per previous year and
leaving a total demand to be 90.01 mb/d.

OECD Oil Demand

In the OECD, demand was revised lower by 0.5 mb/d m-o-m, to show an estimated decline of
around 5.3 mb/d in 2020. The latest announcements by various governments in Europe, such
as France, Germany and the UK, introducing curfews and partially or fully shutting down
hospitality services — including banning restaurants and encouraging teleworking — are
estimated to adversely impact demand throughout the remainder of 2020. In OECD
Americas, adjustments were made to reflect lower-than-expected demand in the
transportation sector in 3Q20, as well as a continuation of a slower demand recovery in
4Q20.
 OECD Oil Demand 2019-20 (in mb/d)
america us europe asia pacific total OECD

60

50 47.75
45.44
42.87 43.86
42.44
40 37.59

30
25.7
24.34 23.47 24.3 23.04
20.86 19.66 20.03 19.98
19.32 18.84
20 16.38
14.25 13.35 12.89 12.23 12.37
11.01
10 7.79 7.75 6.54 6.52 7.33 7.03

0
2019 1Q20 2Q20 3Q20 4Q20 2020

Data – OPEC , visualization – self

Non OECD Oil Demand

In the non-OECD, demand was revised higher by 0.2 mb/d compared with last month, to show
an estimated decline of around 4.5 mb/d in 2020. The positive momentum witnessed in China
in 3Q20 and expectation for similar performance throughout the rest of 2020 instigated the
upward adjustment. China’s demand was supported by rebounding economic activity,
including improving industrial activity indicators and growth in the petrochemical sector. In
India and Other Asia, oil demand estimates remain as noted in the previous month’s report,
showing some degree of stabilization.
 Non OECD Oil Demand 2019-20 (in mb/d)
china india other asia latin america middle east africa eurasia Total non OECD

60
52.02
49.81
50 47.27 48.12 47.57
45.02

40

30

20
13.3 12.85 12.97 13.58 12.53
10.7
10

0
2019 1Q20 2Q20 3Q20 4Q20 2020

Data – OPEC , visualization – self

World Oil Supply

The non-OPEC liquids production forecast for 2020 was revised down by 0.06 mb/d from the
previous month’s assessment and is now estimated to contract by 2.43 mb/d, owing to
downward revision in the US due to production outages in the GoM following two hurricanes
in October, as well as the lower-thanexpected output in Norway, the UK, and Mexico.
Following a drastic decline of 5.74 mb/d in 2Q20 q-o-q, non-OPEC supply in 3Q20 rose by
0.62 mb/d q-o-q, as shut-in wells in the US lower-48 onshore fields were reactivated.
 Oil Production(in mb/d)
32 31.5
31 30.1
30 29.17
29 28.33
28
27
26 Demand Supply Gap Trends
2019 2020

OECD Production Non OECD production

In November, demand for OPEC crude in 2020 is revised down by 0.2 mb/d, from the
previous month, to stand at 22.1 mb/d. This is around 7.2 mb/d lower than in 2019.
According to secondary sources, OPEC crude production averaged 28.3 mb/d in 1Q20, which
is about 7.5 mb/d higher than demand for OPEC crude. In 2Q20, OPEC crude production
averaged 25.6 mb/d, which is 8.9 mb/d higher than demand for OPEC crude. In 3Q20, OPEC
crude production averaged 23.8 mb/d, which is 0.7 mb/d lower than demand for OPEC crude.

2. Demand and Supply Gap Trends

Source: https://www.iea.org/data-and-statistics/charts/world-oil-supply-and-demand-
1971-2019

3. BIGGEST PRODUCERS AND

CONSUMERS OF OIL
Top 10 oil producers are as follows:
Sl No. Countries Barrel/day (in millions)
1. United States 19.51
2. Saudi Arabia 11.81
3. Russia 11.49
4. Canada 5.50
5. China 4.89
6. Iraq 4.74
7. UAE 4.01
8. Brazil 3.67
9. Iran 3.19
10. Kuwait 2.94

Share of Global Production

19%
29%

12%

11%
3% 4%
5% 5% 5%
3%
4%

United States Saudi Arabia Russia Canada

China Iraq UAE Brazil
Iran Kuwait Others

Biggest producer of OIL - United States of America

Amount produced - 12.23 million barrels per day as of 2019
-10.5 million barrels per day as of Nov 2020
Share of world total oil production by US - 19%

Top 5 petroleum refining companies in the United States

Rank Corporations Barrels/Day No of Refineries
1. Marathon Petroleum 3,024,715 16
2. Valero Energy 2,181,300 13
3. Philips 66 1,919,300 10
4. Exxon Mobil 1,732,124 5
 5. Chevron 1,037,660 5
Source: Wikipedia as of Jan 1, 2019

Top 10 consumers of oil are as follows:

Sl No. Countries Daily World Share
Consumption
(barrels)
1. United States 19,687,287 20.3%
2. China 12,791,553 13.2%
3. India 4,443,000 4.6%
4. Japan 4,012,877 4.1%
5. Russia 3,631,287 3.7%
6. Saudi Arabia 3,302,000 3.4%
7. Brazil 2,984,000 3.1%
8. South Korea 2,605,440 2.7%
9. Canada 2,605,440 2.6%
10. Germany 2,383,393 2.5%
Worldwide demand for crude oil (including biofuels) in 2019 added up to 100.1 million
barrels for every day and is extended to decrease to 91.3 million barrels for each day in 2020.
This abatement is expected due to the monetary and versatility effects of Covid-19, including
widespread lockdown, over the world. When contrasted with the day by day oil interest of
86.4 million barrels in 2010, the expanding request direction that happened in the previous
decade is by the by still clear.
Biggest consumer of oil- The United states of America
Share of world total oil consumed by US- 20%

US OIL CONSUMPTION

3%2%
Transpotation
26% Industrial
Recidential
Commercial
68%
Electric Power

The US Oil market in 2020

The Covid-19 outbreak has had a major impact on the production, consumption and not to
forget the price of oil globally. The US being the largest producer of Oil, has hit rock bottom
by producing around 10 million barrels of oil per day. The US was estimated to produce
almost 19.15 million barrel per day in the year of 2020.

Two-Thirds of oil consumptions is accounted for the transport. Of the three main transport
fuels, jet fuel has been the most affected by the Covid-19 pandemic, given the collapse in air
travel. The pandemic is expected to have a lasting impact on oil consumption. Air travel
could see a permanent reduction as business travel is curtailed in favour of remote meetings,
reducing demand for jet fuel. A shift to working from home may reduce demand for gasoline,
but this could be somewhat offset by increased use of private vehicles if people remain averse
to using public transport. While the overall impact is difficult to quantify, concerns about
future oil demand are already impacting corporate investment decisions.

4. Oil Price Trends

Crude oil market is the worst impacted market in this pandemic due to negative demand and
positive supply. Prices have fallen almost by 2/3rd since January 2020, when first case of
human to human spread was recorded. It is for the first time after the global recession of 2009
that demands of oil have fallen so low in 2020. Besides the corrective measures during
pandemic and a global recession, things became severe with the collapse of the production
agreement by OPEC and its partners in early march and due to this many industries started
facing reduction in supply. Thus, weak demand noticed due to following two reasons:

Source: https://www.macrotrends.net/1369/crude-oil-price-history-chart

Transport Disruptions
The largest factor driving the collapse in oil prices has been the sharp reduction in demand
arising from mitigation measures. The unprecedented drop in transport in many countries has
led to a sharp fall in fuel demand. Oil demand fell by 6 percent (6 mb/d) in 2020 Q1, and the
International Energy Agency anticipates it will fall by 23 percent (23 mb/d) in 2020 Q2, as a
growing number of countries have put in place mitigation measures, particularly the United
States (the largest consumer of oil).

Slowdown in economic activity

Oil has a relatively high-income elasticity of demand, which suggests that declines in economic
growth can lead to falls in oil demand. Oil prices have also been buffeted by the collapse and
rebirth of production agreements among OPEC+ members.2 The breakdown of the OPEC+
production agreement in early March exacerbated the ongoing fall in oil prices, with a decline
of 24 percent the day after the announcement. While the potential increase in supply arising
from the end of production restraint (around 2-3 million barrels per day) was small compared
with the expected fall in demand, it nonetheless aggravated expectations of chronic oversupply.
In mid-April, the group agreed on historically large production cuts of 9.7mb/d. However, the
announcement did little to support prices, given the uncertainty of demand and worries the
announced supply cuts will be insufficient.

Implications
Demand from the aviation sector will continue to suffer from the contraction in global air travel.
In this case, oil demand in China suffers the most in the first quarter, with a year-on-year fall
of 1.8 million barrels per day (mb/d). Global demand drops by 2.5 mb/d.
In the second quarter, an improving situation in China offsets deteriorating demand elsewhere.
A progressive recovery takes place through the second half of 2020. For 2020 as a whole, the
magnitude of the drop in the first half leads to a decline in global oil demand of around 90,000
barrels a day compared with 2019.
Global oil demand will grow by 5.7 mb/d over the 2019-25 period at an average annual rate of
950 kb/d. This is a sharp reduction on the 1.5 mb/d annual pace seen in the past 10-year period.
Following a difficult start in 2020 (-90 kb/d) due to the coronavirus, growth rebounds to 2.1
mb/d in 2021 and decelerates to 800 kb/d by 2025 as transport fuels demand growth stagnates.

Oil price forecast

Source: World Bank
Note: Lines indicate oil prices for 12 months before and after the trough, indexed to 100 at
the trough. Dashed line indicates forecast.

5. Oil Shocks – 1973,1979,1990

The term "oil crisis" refers to a sudden rise in the price of oil that is often accompanied by a
reduction in supply. As oil is the primary source of energy for advanced economies, an oil
crisis can risk the global economic and political stability.
The first oil crisis occurred in 1973, when the Organization of Arab Petroleum Exporting
Countries, led by Saudi Arabia, declared an oil embargo. The embargo was aimed at countries
seen as supporting Israel during the Yom Kippur War like United Kingdom and United States.
The price of oil had risen nearly 300 percent from
US$3 per barrel to nearly $12 per barrel by the end of
the embargo in March 1974. The price of oil per barrel
doubled, then quadrupled, putting skyrocketing costs
on consumers and posing structural threats to
national economies' stability and at the time, India
was importing roughly half of its crude oil
requirements in hard currency from OPEC and half in
rupees from the Soviet Union. As a result, India was
severely harmed by OPEC's steep increase in oil
prices. Food production, which is critical to India's stability, fell by at least three million tons
during the spring harvest as a result of rising oil prices and a shortage of petroleum-based
fertilizer.
In a book “Political Power and the Arab Oil Weapon”, it was concluded that the embargo was
a failure because the embargoed countries' policies on the Arab–Israeli conflict did not
change. However, few people believe that the embargo altered the international economy.
Over time, the oil embargo shifted Western policy toward increased exploration, alternative
energy research, energy conservation, and more restrictive monetary policy to combat
inflation.
The Iranian Revolution (1978–79) triggered second major oil crisis in 1979. The Iranian oil
industry was severely harmed by high levels of social unrest, resulting in a large loss of output
and a corresponding rise in prices. The situation deteriorated after the outbreak of the Iran-
Iraq War (1980–88), which added to the region's already high level of insecurity. The price of
oil was stable at $32 per barrel in 1981.
However, by 1983, major capitalist economies
had adopted more efficient production
methods, and the 1970s problems had been
transformed into a relative oil oversupply rather
than a shortage.
The 1990 oil price shock occurred in response to
Saddam Hussein's second invasion of a OPEC
member, Kuwait, on August 2, 1990. The price
spike was less severe and lasted only nine
months, compared to the previous oil crises of
1973 and 1979, but it still contributed to the early 1990s recession. The markets reacted with
panic, fearing that the oil supply from Iraq or Kuwait would be at risk, resulting in an oil
shortage. Thus, the oil price skyrocketed from $16.54 per barrel in July 1990 to $32.88 in
October, a 100 percent increase in just two months. Oil market speculations also had an
impact. Global GDP growth fell from 2.5 percent in the year of the war to 0.8 percent in 1991.
It remained low for a long time, only recovering to 2.2 percent in 1994.

6. Evolution of OPEC as a cartel

OPEC, or the Organization of Petroleum Exporting Countries, is an intergovernmental
organization comprised of 13 major oil-producing countries. It was founded in 1960 with the
mission of "coordinating and unifying the petroleum policies of its Member Countries and
ensuring the stabilization of oil markets in order to secure an efficient, economic, and
consistent supply of petroleum to consumers, a consistent income for producers, and a fair
return on capital for those investing in the petroleum industry." Iran, Iraq, Kuwait, Saudi
Arabia, and Venezuela founded OPEC in Baghdad on September 1960. The organization's
headquarters are in Vienna, Austria, where the OPEC Secretariat, the executive organ,
handles day-to-day operations.
As OPEC countries produce roughly 40% of the world's oil supply, export 55% of
internationally traded oil, and hold more than three-quarters
of total proven crude oil reserves. OPEC's activities include
determining output levels for Member Countries, fixing the
price of oil, and imposing quota restrictions and production
cuts to keep the industry in balance. Therefore, OPEC is
deemed as an international cartel. OPEC has been hit by many
conflicts throughout its history, leading some experts to
conclude that it is not an effective cartel and has little
influence over the amount of oil produced or its price. Other
experts believe OPEC is an effective cartel. Despite the fact
that the oil industry is not a monopoly, OPEC can act in a
monopolistic manner. However, because they produce a large amount of low-cost oil, they
can effectively control the supply curve and where it intersects the demand curve by limiting
their output.
7. OPEC Quota System
The OPEC quota system was formally agreed in March 1983 in London at a special meeting that set a
production ceiling of 17.5 million barrels per day, lowering the OPEC price to an uniform $28 per
barrel. Rafael Sandrea provides the foundation for estimating allocation quotas.

The factors considered were:

• Reserves
• Production capacity
• Historical production share
• Domestic oil consumption
• Production costs
• Population
• Dependence on oil exports
• External debt

The graphs in general illustrate the widely vital response of OPEC Member nations with effect to rises
and declines in determined production quotas, as derived from the Quota Production Limit and
Petroleum Condensate Export Data that OPEC went on to release through the end of 2010. The graph
below also shows that, among OPEC's major oil producers, quota adherence has become less of a
concern during the 2000s, with the exception of Iraq, which has obviously begun to overproduce their
ceiling limit in order to take unfair advantage of high prices. The following are some of the major
OPEC countries' oil production characteristics.

The following countries are revealed in the graphs until 2010: -

• Since 2003, Qatar and Kuwait have been overproducing, while the UAE began overproducing in
2006.
• Iran Except for the last two years of 2009-10, the company has adhered to its quota. Saudi Arabia,
on the other hand, functions as a swing producer, fluctuating its own production capacity in response
to changes in oil prices.
Despite being a good Quota follower, it has been overproducing since 2002.
8. OPEC Share in global output-trends
In 2020, OPEC produced about 37.1 percent of the world's total crude oil. In that year, OPEC's crude
oil sold for an average price of roughly 41.47 US dollars per barrel. OPEC was founded in Iraq in
1960 and stands for Organization of Petroleum Exporting Countries.

Source:- https://www.statista.com/statistics/292590/global-crude-oil-production-opec-share/

Regional distribution and OPEC

OPEC is made up of fourteen countries, largely from the Middle East and Africa, but also from South
America. Over the last decade, the Middle East has produced nearly a third of the world's total oil
production, while Africa and South America have seen their share decline. Except for the years
preceding the financial crisis, from 2007 to 2009, and in 2020, because to the coronavirus epidemic,
worldwide oil output has increased every year since 1998.

9. Petrodollars
Any US dollar paid to oil-exporting countries in exchange for oil is known as a petrodollar. The dollar
is the world's most influential currency. As a result, the majority of international transactions,
including oil purchases, are priced in dollars. Oil-exporting countries get paid in dollars rather than
their native currency for their exports.
Furthermore, the majority of oil-exporting countries own their oil industry. As a result, their national
income is based on the value of the dollar. If it drops, so goes the revenue of their government.
As a result, the majority of these oil exporters' currencies are likewise pegged to the dollar. As a
result, if the value of the dollar declines, the price of all their domestic goods and services falls with it.
This aids these countries in avoiding large fluctuations in inflation or deflation.

• Surpluses are created by the petrodollar system, which are

referred to as petrodollar surpluses. These surpluses must be
recycled, which means they can be utilised for domestic
consumption and investment, lent to other countries, or re-
invested in the US via bonds and T-bills. This procedure aids
in the creation of liquidity in the United States' financial
markets. These exporters lessen their reliance on oil revenue
by investing their surpluses.
• With the dollar's purchasing power eroding, some countries
began to question the benefits of the petrodollar
arrangement. Iran, Russia, and India are considering
changing the base value of their exports from the US dollar
to their own currency.
• Late last year, China indicated that it was considering pricing
oil in the Yuan. Because China is the world's largest
importer of oil, it perceived the price of the world's most
vital commodity as a reasonable shift.
• Due to deteriorating ties with the United States, one of the
important players in the oil market, Saudi Arabia, may soon
begin accepting payments in currencies other than the US
dollar. As a result, investors should keep a careful eye on
Saudi Arabia.
• The International Monetary Fund (IMF) has already introduced SDRs (Special Drawing
Rights) as a global currency. As the demand for petrodollars declines, the value of the US
dollar in relation to SDRs can alter.

How Petrodollar system originated

The history of the gold standard is intertwined with the petrodollar system. Following World War II,
the United States possessed the majority of the world's gold supply. If other countries linked their
currencies to the dollar, it pledged to redeem any US currency for its gold worth. At the 1944 Bretton
Woods Conference, other countries agreed to this agreement. It made the United States dollar the
world's reserve currency.
President Franklin D. Roosevelt signed the agreement with Saudi Arabia on February 14, 1945. He
talked with King Abd al-Aziz of Saudi Arabia. In exchange for military and business training, the US
built an airstrip in Dhahran. This partnership was so important that it withstood years of
disagreements over the Arab-Israeli conflict. The 1945 agreement between the United States and
Saudi Arabia cemented the relationship between the dollar and oil. The petrodollar was born.

10. Success of OPEC as a Cartel

OPEC has been a juggernaut in the oil market since its inception more than half a century ago. The
14-member club of oil exporters is a textbook example of a successful cartel, with complete control
over the world's most important commodity. OPEC's membership has been nearly wiped out multiple
times as new technologies and petroleum discoveries have upended the global energy economy. The
Organization of Petroleum Exporting Countries, on the other hand, has frequently defied its
opponents. It now faces a new long-term survival issue as the United States, previously its largest
consumer, unleashes record supplies of shale oil and the world shifts to renewable energy. As a result,
OPEC is reverting to its tried-and-true tactic of limiting output to raise prices. But it's uncertain
whether such a strategy can still work.

The Situation
• After being hit by an oil oversupply in late 2016, Saudi Arabia and other OPEC members agreed
to cut production for the first time in eight years. They even teamed up with Russia, which had
been a tough competitor for years.
• By mid-2018, the risk appeared to have paid off: the surplus had been eradicated, and oil prices
had risen to well than $85 per barrel, a four-year high. However, the victory was self-defeating in
certain ways. OPEC's price support re-energized "fracking" by American shale drillers,
propelling the United States past Saudi Arabia and Russia to become the world's leading
petroleum producer.
• President Donald Trump was also enraged by the rally, and he is continuing to put pressure on
his allies in Riyadh to prevent prices from rising again. As a result, oil prices fell in late 2018 and
remained below their peak in 2019, despite OPEC members Venezuela and Iran slashing supply
due to political problems and US sanctions. As a result, the cartel is on a tightrope, trying to find
prices high enough to finance their economies while avoiding a backlash.

The Background
• Saudi Arabia, Iran, Iraq, Kuwait, and Venezuela created OPEC in 1960 to take authority away
from the large American and European oil companies that determined crude prices. In 1973, it
rose to prominence as its Arab members placed an oil embargo on Western countries in
retribution for their support for Israel.
• OPEC stopped utilising oil for political purposes, but it continued to act as a "swing
producer," increasing or decreasing output when supplies - and consequently prices - were too
high or too low. OPEC currently controls nearly 40% of worldwide output, has the majority
 of global reserves, and operates the most profitable areas on the globe. OPEC nations,
however, rely on high oil prices to pay government spending since they are "petro-states."
• Corruption and incompetence exacerbate the problem in some countries, such as Venezuela
and Nigeria. Saudi Arabia has an additional motive to keep prices high since it is planning to
partially privatise its state-owned oil business, Aramco. OPEC's biggest threat arose in 2011,
when U.S. output, which had been in terminal decline, began to climb owing to fracking,
which involves blasting subsurface rocks with high-pressure liquids to extract the oil and gas
contained therein.
• The group's initial reaction was to keep pumping, hoping that this new supply would
eventually fizzle out. OPEC changed strategy after prices fell from $115 in mid-2014 to $27
in early 2016.

The Argument
• The cartel's authority has grown as a result of its partnership with Russia and ten other non-
member countries, which it hopes to make permanent. The world's thirst for oil isn't going
away: most analysts predict that it will continue to grow for at least another two decades, with
any drop being gradual.
• Because its Middle Eastern members can produce crude at around a third of the cost of U.S.
shale, OPEC has a built-in competitive edge. Nonetheless, the cartel's market share is
significantly lower now than it was in the 1970s. Its current intervention is struggling to keep
prices up. Furthermore, the threat of shale is greater than ever, posing a lasting threat to
OPEC's market dominance.
• Then there's the growing popularity of electric automobiles and renewable energy, both of
which could result in oil consumption peaking sooner than projected.

11.Challenges to OPEC
● Internal Conflict between the members of OPEC
OPEC's ability to adopt policies to achieve goals has been hampered by a lack of cooperation,
coordination, and conflicts among its members. OPEC employs the quota system to limit oil
output in order to raise the price of the oil. Each member country is limited to a certain
number of oil barrels each day. However, the method is inherently problematic, and it is
difficult to apply because it necessitates a high level of self-discipline on the part of all
members. Unlike Iraq, Saudi Arabia, and Kuwait, for example, some do not have reserves that
can endure 80 years, so they think they must pump at maximum capacity at the earliest and
others like Nigeria, Iraq, and Iran have enormous populations and hence require more cash
than Kuwait and the UAE, which have small populations. As a result, the cartel is more heated
due to its particular economic and political circumstances adding to the rift. To agree on new
production quotas without creating serious internal disputes that potentially leads to a
collapse in oil prices still remains a challenge for OPEC.
 ● Discovery of Shale Oil in the U.S.
The OPEC monopoly on oil prices appears to be in jeopardy. The discovery of shale oil in North
America has aided the United States in producing near-record levels of oil. The United States
has subsequently re-emerged as a top energy producer, thanks to the discovery of shale oil
and breakthroughs in drilling techniques. On the supply side, shale oil represents a new
paradigm that has the potential to drastically alter the supply dynamics of oil markets. The
United States, which was formerly the world's largest importer of crude oil, is now the world's
largest producer and distributor. In 2019, the United States alone produced roughly 20 million
barrels per day, which was the highest, and OPEC as a whole produced around 30 million
barrels per day.In its annual Energy Outlook, the International Energy Agency (IEA) says that
US shale-oil output will have an impact on global energy markets in the next few years,
bolstering the country's power over OPEC states.

● Decline in demand due for OPEC’s crude oil

The International Energy Agency (IEA) has predicted a drop in demand for OPEC crude oil due
to rising output from non-member competitors. Non-OPEC countries are expected to increase
output by 2.3 million barrels per day next year, bringing total supply to 67.1 million barrels
per day.

INDIAN OIL MARKET

Import and Export of petroleum products –
Annual Trends :
From 2011 to 2019, the value of petroleum products imported into India was
calculated, with a forecast for 2020. (in billion Indian rupees).
Due to strong growth in consumption, India's oil import dependency has increased
from 4882.82 in 2011 to 9250.31 in 2020. The number of cars on the road in India
has increased, resulting in a rise in oil demand.
In terms of primary energy consumption, India was ranked third in the world. Inland
petroleum product manufacture is no longer sufficient due to the industry's rapid
growth. The volume of petroleum products imported in fiscal year 2020 topped 43
million metric tonnes..
According to the data, petroleum product exports peaked in the years 2013-2014. Later in the
year, the global petroleum rate fell, resulting in a dip in demand, leading in a large drop in
demand over the next three years. The export rate remained mostly constant in 2017, with a
slight uptick.
One of India's most important exports is refined petroleum. The Reliance Group's Jamnagar
Refinery is located in Gujarat, India, and is the world's largest oil refinery. Among other critical
oils, it refines petroleum, gasoline, diesel, kerosene, liquefied petroleum gas, jet fuel, and fuel
oils. Due to India's enormous refineries, it is one of the world's major exporters of refined oil.

Consumption of petroleum products – Annual

.

Trends :

Percentage share of various petroleum products

in total consumption - Annual Trends :

.
In April 2021, compared to April 2020, petroleum product production climbed by 30.9 perce
nt, compared to a 0.7 percent decrease in March 2021.
This is due to the recovery of the Covid-19 epidemic.
Almost all petroleum is consumed by the transportation sector.
On the graph above, the percentage share of HSD (High Speed Diesel) is the highest. Comme
rcial vehicles, stationary diesel engines, locomotives, and pumps with medium and high-
speed consumption ignition engines commonly use HSD as a fuel.
The other key components of India's petroleum products are liquid petroleum gas,motor spi
rit, and petroleum coke.
For a long time, these products have been a mainstay in India's need.

Petroleum coke is used in the manufacturing of electrodes and anodes, as well as in the
metal and brick industries. Demand for SKO (Superior Kerosene Oil) has been progressively
dropping due to its negative environmental impact. According to the data, kerosene (SKO)
use has been declining for over a decade. Kerosene consumption was reduced as electricity
and improved cooking gas sources became available. The federal government's decision to
stop providing subsidised kerosene to states also contributed to a decrease in usage.

In April 2021, petroleum product consumption climbed by 81.6 percent to 17 MMT, up from
9.4 MMT in April 2020. The rise was partly due to a low starting point in April 2020, when
India was on lockdown statewide as a preventative step against the COVID-19 pandemic.
With the exception of kerosene, all products increased in April 2021 over the same month
the previous year.

Import Dependency Ratio – Trends (last 4-5

years)
The Import Dependency Ratio measures how much of a country's commodity supply comes
from imports. A high ratio indicates greater dependency on imports.
The government aims to reduce its reliance on oil imports to 67 percent by 2022, but
domestic output has been declining year after year, owing primarily to ageing fields and a
lack of major discoveries. In recent years, the government has implemented a number of
policy initiatives aimed at attracting more capital and technology to the upstream sector,
which is expected to boost local output. Companies have also invested billions of dollars,
but the country's overall output has continued to fall.

Method of computation: IDR = Import *100%

Import + production – export
 2016-17 2017-18 2018-19 2019-20 2020-21 (April-Jan)
*
(Provisional)
Import Dependency 81.7% 82.9% 83.8% 85% 77.1%
Ratio

The year wise details of crude oil imported and details of imports of crude oil as percentage
of total crude oil processing are as shown:

300 90
245.4 251.9 257.2 254.4
250 226.5 227 89.4 89.5
213.9 220.4 89.2
89
200 182.2
162.8 88.5
150 88.1 88
100 87.5 87.5
87.2
87
50 86.5
0 86
2016-17 2017-18 2018-19 2019-20 2020-21
Crude oil import (In MMT)
Crude oil processed (In MMT)
Percentage of crude oil import out of total crude oil processed

Imported crude oil price annual trends (Indian

basket)
The Indian Basket, also known as the Indian Crude Basket, is a weighted average of Dubai
and Oman (sour) crude oil prices and Brent Crude oil prices (sweet).It is used in India as an
indicator of the price of crude imports. Crude oil with a high Sulphur content is referred to
as sour, while crude oil with a low Sulphur content is referred to as sweet. Sour grade crude
attracts additional processing costs. The ratio of actual sour and sweet consumption
(domestic and imports) by all Indian refiners in the previous year is used as a weight in
calculating the Indian basket's current price.

April May June July Aug Sept Oct Nov Dec Jan Feb March Avg
2016-17 39.88 45.01 46.96 43.52 44.38 44.48 49.25 44.46 52.74 54.08 54.86 51.47 47.56
2017-18 52.49 50.57 46.56 47.86 50.63 54.52 56.06 61.32 62.29 67.06 63.54 63.80 56.43
2018-19 69.22 75.25 73.83 73.47 72.53 77.88 80.08 65.40 57.77 59.27 64.53 66.74 69.88
2019-20 71.00 70.01 62.37 63.63 59.35 61.72 59.70 62.53 65.50 64.31 54.63 33.36 60.47
2020-21 19.90 30.61 40.63 43.35 44.19 41.35 40.66 43.34 49.84 54.79 61.22 64.73 44.82
($/bbl.)
- Crude oil prices are average of daily prices of every month.

Imported crude oil price annual trends

2020-21 44.82

2019-20 60.47

2018-19 69.88

2017-18 56.43

2016-17 47.56

0 10 20 30 40 50 60 70 80

Retail selling price of Petrol and Diesel: Daily

Data Trends - Delhi 2020

Retail Selling Price of Petrol (Jan 1st to Nov 24th, 2020)

Retail Selling Price of Diesel (Jan 1st to Nov 24th, 2020)