New Delhi, April 23 (IANS) Indian oil marketing companies (OMCs) have begun relying on their commercial crude inventories as supply chains tighten following the closure of the Strait of Hormuz amid escalating geopolitical tensions in West Asia, according to a report on Thursday.

The disruption linked to the ongoing US-Israel conflict involving Iran has constrained supplies from the Gulf region, while sharply increasing freight charges, insurance premiums and transit durations, NDTV Profit reported.

Despite the spike in costs, robust domestic demand for fuels has limited the ability of OMCs to fully pass on the burden to consumers, it said.

India’s crude and petroleum product import bill declined 36 per cent year-on-year to $12.18 billion in March, compared to $19 billion in the corresponding period last year.

Moreover, procuring crude from non-Gulf sources has also proven expensive, as global buyers compete for limited alternative supplies.

However, the drop was driven by a steep fall in import volumes rather than any softening of prices.

According to the report, monthly crude imports are estimated to have fallen to up to 3 million barrels per day (mbpd), nearly halving from 6.38 mbpd a year ago.

This comes at a time when imports typically rise to meet increased demand during the summer months and the kharif agricultural season.

On the other hand, consumption trends remain strong.

Petrol demand touched a 10-month high of 1.08 mbpd in March, while diesel consumption scaled a record 2.14 mbpd, according to the Petroleum Planning and Analysis Cell.

Crude prices have surged significantly, with India’s crude basket averaging $113.49 per barrel in March, up from $69.01 in February and $72.47 in the same month last year.

While Brent crude rose to an average of $103.89 per barrel during the month.

The report also highlighted that India’s total crude and petroleum storage capacity is estimated to cover around 74 days of consumption, including strategic reserves of about nine days and commercial stocks held by OMCs. As of late March, available inventories were sufficient for roughly 60 days.

While refineries continue to operate at high utilisation levels, the government has not yet tapped into strategic reserves, leaving companies to depend largely on their own inventories.

The Strait of Hormuz, which facilitates nearly one-fifth of global oil trade, continues to remain shut despite a temporary ceasefire between the US and Iran announced earlier this month and subsequently extended.

The halt in tanker movement, attributed to actions by Iran’s Islamic Revolutionary Guard Corps in response to US naval measures, has disrupted an estimated 600 million barrels of oil supplies to global markets, according to industry estimates.

–IANS

ag/na