COVID crisis may delay oil offloading operations in India

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The alarming situation with the spread of the coronavirus in India has started to affect operations at some of India’s ports, which could lead to delays in oil offloading and discharge of vessels and disrupt other trade operations.

The Karaikal port declared force majeure between May 10 and 24, saying its operations “are being severely affected” due to the full curfew in the state of Tamil Nadu. Karaikal operations, including but not limited to unloading, loading, receipt, and dispatches, are being affected, the port operator said in a notice this week.

Disruption to port operations could affect oil and other trade if the situation persists.

The port of Visakhapatnam is also seeing the disruption of cargo operations, with a force majeure until May 19, G. Veeramohan, president of the Vizagapatam Chamber of Commerce and Industry, told Bloomberg.

Indian state-run refiner Hindustan Petroleum Corporation uses Visakhapatnam for crude oil imports. The company’s import operations are not affected because it uses an offshore facility for tanker unloading, Hindustan Petroleum’s chairman Mukesh Kumar Surana told Bloomberg.

India continues to fight the Covid resurgence, with the infections now spreading to rural areas. Daily new cases are now below last week’s peak of over 400,000, but on Friday the country reported a third consecutive day of more than 4,000 deaths.

Due to the COVID crisis, Indian fuel demand plunged by 9.4 percent in April compared to March, according to official data cited by Press Trust of India on Wednesday.

The slump in oil demand amid local lockdowns and curfews has been a concern to the market in recent weeks. Gasoline and diesel prices in India hit record highs this week, adding another concern about demand in the world’s third-largest oil importer.

Oil demand in India is the main drag on the expected lower-than-previously-thought global oil demand this quarter, OPEC warned in its monthly report this week. The cartel, however, is optimistic that accelerating vaccination programs and rising fuel demand will raise global oil demand by 5.95 million barrels per day (bpd) this year despite the current COVID crisis in India, and kept its 2021 demand outlook unchanged from last month.