Indian refineries slash Middle East oil imports as storage fills up

Due to plummeting fuel demand and overflowing storage capacity, at least three oil refiners in India have asked for lower crude oil imports for May from the Middle East, including from the world’s top exporter Saudi Arabia.

Two oil refiners will be cutting their crude oil imports from Saudi Arabia by between 66 percent and 80 percent for May, as India – population 1.3 billion people – went into a nationwide lockdown at the end of March. The lockdown has since been extended to May 3.  

Due to the lockdown and to India’s struggles to contain the spread of the coronavirus, fuel demand in the world’s third-largest oil importer is plummeting, so refineries are cutting run rates and struggling to store crude and refined products in dwindling available storage capacity.

“Some Indian refiners have cancelled their shipments for April and May,” a source with a Mideast oil producer told Reuters, confirming the crash in India’s oil demand. “They will take these cargoes in the later part of the year to meet their annual commitment,” the source told Reuters.

Earlier this month, Indian Oil Corp (IOC), the country’s biggest refiner and fuel retailer, was said to have declared a force majeure on oil imports from some of its top oil suppliers, including Saudi Arabia.

READ MORE: Nationwide lockdown could cost Indian economy over $4 BILLION A DAY

With demand collapsing, India’s oil refiners have already filled 95 percent of their combined storage capacity for fuel of 85 million barrels, officials at three state oil refiners told Bloomberg on Wednesday. Even the tanks at the 66,000 fuel stations in India are full, as more than a billion people are under lockdown and not driving.

In the first two weeks of April, India’s consumption of gasoline and diesel—more than half of the country’s oil demand—crashed by over 60 percent, according to Bloomberg estimates.

This article was originally published on Oilprice.com