The combination of high oil prices and a weak Indian rupee means Indian crude prices are 47% more expensive this year in rupee terms according to Reuters. To cope with the higher cost, India is considering cutting imports and relying on stockpiled crude according to two refinery sources with knowledge of the matter. The chairman of India’s biggest oil refiner Indian Oil Corp, Sanjiv Singh, confirmed the plan to cut imports in favour of stockpiled crude was discussed at a September 15th meeting attended by refinery officials. The head of refiners at Bharat Petroleum also said India was “looking at various options to contain the costs including reducing our inventory. This will be a coordinated effort among refiners”.With energy prices rising, crude oil is increasing sucking away all the dollar from Energy importing economies like India
This would effectively mean the oil is starting to price itself out and erode its own demand. In emerging market currency terms, oil is just 1.2% off its all time high and is up nearly 200% from its 2016 low.