High oil and LNG prices weigh on India’s energy sector — OilPrice
In India, rising prices for oil and liquefied natural gas, as well as higher maritime shipping costs, are increasing pressure on the marketing margins of the oil and gas sector. As OilPrice reports, this is happening amid the impact of the war in Iran on global oil and LNG trade flows.
Fuel sales margins
Indian brokerage firm Equirus said in a note cited by local media that higher refining profits are partly offsetting the negative impact. At the same time, marketing margins on petrol and diesel fuel sales remain negative.
High Asian LNG prices are also weighing on gas segment margins and, according to Equirus, may lead to a reduction in Indian LNG imports in September after substantial deliveries in August. Costs for major Indian gas consumers remain high.
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Import costs are rising
Last week, the spot price of LNG in Asia climbed to its highest level since 2022 amid uncertainty over supplies from the Middle East and intensifying competition between Europe and Asia for winter gas volumes. It was 61% higher than a year earlier and 22% above the level of three months ago.
India’s crude oil import bill has also risen sharply in recent months due to reduced supplies from the Middle East and risks to shipping in the Strait of Hormuz. According to OilPrice, freight rates on the route from Ras Tanura in Saudi Arabia to India have increased by more than 400% since February 28; the publication links this to the start of the war and Iran’s closure of the strait.
From April through June, India spent 60% more on oil imports than in the same period of the previous year, despite slightly lower import volumes. In July, oil import spending was 41% higher year-on-year.
