Mondays crude oil price collapse may not have much impact on Indian refiners or on pump prices at least till June but could spoil the prospects of oil giants such as Saudi Aramco pouring billions to buy stakes in local refineries such as Reliance Industries Ltd, Bharat Petroleum Corporation or the planned mega refinery in Maharashtra.

In India, it doesnt have much impact simply because we are not going to buy much of crude, all our tanks are full throughout the country, said the director refinery of a state-run oil refining company.

So, immediately in May/June, we dont see any impact. The price crash will have an impact if we buy the crude and bring it to India, but bringing to India is not possible because tanks are full and oil tankers are not easy to come by because tankers are floating with oil on the high seas. So, nothing much is happening, he added.

The lower run rates of local refineries triggered by the coronavirus-induced demand compression will add to the woes.

Refineries are not going to see 100 per cent utilisation at least either till May if not till June also. So, over the next two months we dont benefit from the impact of rock bottom prices, said another executive at a state-run oil firm.

However, if we look at the larger picture, it will affect the overall pricing because the OPEC Plus cuts announced last week are not sufficient. We are having almost 30 per cent reduction in demand while the cut in production is 10 per cent. So, the 20 per cent reduction is still floating extra, he said.

The executive said that India is unable to take advantage of the price crash because its underground storage tanks in Mangalore, Padur and Vizag are full with no expansion coming on stream in the near future.

The price collapse will not reflect in a reduction in pump prices.

Pump prices are independent of this because a large portion of it is taxes. The government is also not realising the taxes because nobody is buying fuel, he said.

Oil producers would be forced to re-work their business plans due to the price plunge.

One of the casualties could be Saudi Aramcos plan to invest as much as $15 billion for a 20 per cent stake in the oil to chemicals business of Reliance Industries Ltd which was announced in August last year.

It could also spoil the plans of global oil giants to bid for the governments stake in BPCL which is being lined up for privatisation by the government.

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Oil price crash may not benefit India due to falling demand and full tanks - BusinessLine