Petroleum Product Exports: A Rocky Road Ahead
New Delhi: The Indian petroleum sector is experiencing a significant downturn, with exports of petroleum products dropping to $44.61 billion during the April-to-November period. This marks a noticeable decline from last year’s $55.02 billion, as reported by the Ministry of Commerce and Industries. The situation worsened in November, where exports fell to $3.72 billion, down from $7.39 billion in the same month last year.
Why the Drop?
The decline in exports can be attributed to several factors, including sluggish demand in developed economies and increased domestic consumption. Moreover, the drop in cheap petroleum imports from Russia has compounded the issue. Industry experts highlight that softening demand in key markets, logistical disruptions along major supply routes, and the Suez Canal blockade have all contributed to this decrease.
Global Competition and Local Challenges
Additionally, the emergence of large refineries globally, such as the Dangote refinery in Nigeria, poses stiff competition for India, particularly in the European market. Lower demand from the chemicals industry, which utilizes petroleum products like naphtha, has further impacted overall exports.
Rising Costs and Changing Routes
With the recent Red Sea crisis disrupting trade, container ships are now rerouting around the Cape of Good Hope, leading to longer transit times and increased costs for Indian exporters. This shift is expected to hinder India’s ability to maintain its competitive edge.
Looking Ahead
Despite these challenges, industry forecasts suggest that India will see a robust growth rate in oil demand, surpassing China’s by 2025. As the country continues to diversify its crude sources, it is poised to be a leading driver of regional oil demand growth.
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