The latest troubles that India is facing regarding it's oil import bill, on the back of a significantly weakened rupee, is having an impact on tanker trade as well. In its latest report, London-based shipbroker Gibson, cited an FT article, regarding India's growing dependence on energy imports. At the moment, the Asian behemoth is the fourth largest energy consumer, while also buying 82% of its crude oil needs from abroad. In all likelihood this trend is bound to continue, will oil imports expected to grow even further.

The problem lies with the fact that the value of the rupee has been declining lately and at the end of August, it reached an 18-year low against the US dollar. According to Gibson, "even though the currency has recently rebounded slightly, the problem for the nation is the huge price hike on imports and especially crude. At the end of the last financial year to March, India’s trade deficit had reached $191bn with more than half ($109bn) made up by crude imports. Brent oil recently peaked above $116/bbl and (according to the FT) every dollar increase in price over a year adds $1bn to the net import bill. In an attempt to stem the decline in the rupee, India’s central bank said it would sell dollars to the three state run oil firms - presumably at a special rate", Gibson said.

It added that "the Indian government has been exploring every avenue possible to reduce their fuel import costs with the oil minister hoping to slash the bill by around $20 billion. The minister has suggested shutting petrol retail stations and even increasing imports from Iran, which they pay for in rupees. However, this could incur the anger of the US with any increase in crude imports from the rogue state. Last week Reuters reported that the government were considering raising diesel prices by around 10% in a bid to cut fuel consumption. This would add between 3-5 rupees to the price of diesel, which accounts for about 40% of India’s fuel use. Another area also under scrutiny is the subsidies currently enjoyed by India’s consumers, but with elections due to be held by May next year, it is unlikely that the government will change the current position", Gibson noted.

It concluded that "the likelihood is that in the short term the country will endeavour to manage crude imports while the economy gets back on track. India’s Foreign Minister recently stated on TV that the nation cannot keep subsidising the cost of fuel and not restrict the use. An announcement on what measures the government will implement is imminent.

Whatever measures are taken, it is almost certain to impact on the tanker market for trade with this vital region. The good news is that since the end of August, the rupee has strengthened against the US dollar, regaining some of the losses over the last few months. Long term, the prognosis is that India’s energy demand will continue to grow once the current dilemma passes", said the shipbroker.

Meanwhile, in the crude tanker market this week, in the Middle East, according to Gibson, "charterers were able to plough their way through the 1st decade October VLCC programme without causing too much of a stir. Certainly there is hardly any tonnage left now for September but as we have nearly reached 30 fixtures already for next month that statistic will mean very little. Present levels to the East are around 270,000mt x ws35 and around 280,000 x ws23 Suez/Suez for Western destinations. Suezmax Owners were given a healthy amount of enquiry to play with at the start of the week, however it has been progressively getting quieter, which will do the rates no favours and we are finishing effectively back at square one with little change foreseeable with a decent looking tonnage list. Aframaxes followed a similar course with enquiry being relatively ample, but having tailed off by the weeks end, Owners will have to settle for the base rates by which they have become accustomed as the local tonnage in the area is left with only scraps to feed upon", Gibson noted.

It went on to say that in the Mediterranean "there was almost no good news for Aframaxes in the Mediterranean. Charterers can easily pick and choose a vessel they like against long and desperate tonnage list. Even though the rates seemed to have bottomed, new discounts were reported out of Black Sea. The only positive development is a restart of a few Libyan terminals, though an impact of that would be limited until export volumes get to usual levels. As it stands for now the market is crawling at the bottom of the pit with 80,000 at WS67.5 for both Black Sea and Med loads. An oversupply of Suezmax tonnage has eagerly snapped up what few cargoes have come their way. Rates from the Black Sea have now slipped to 140,000 mt by w 50 for Mediterranean discharge. Whilst Owners have faired no better for cross Mediterranean cargoes being concluded 140,000 mt by w 47.5", it said.

Finally, in the North Sea, "Aframaxes continue to foster small levels of excitement in relative terms. A tightening for end month created by an increase in long haul voyages saw rates pick up initially last week. That increase garnered more publicly advertised positions and rates were checked at the start of this week. Aframaxes where seen fixing the annual low 100kt ws57.5 for REBCO Baltic/ UK Cont and North Sea at ws82.5 (done twice at time of writing).

However on the cusp of the Month tonnage list look’s thin and the market closes out tight with freight rates pushing up. At time of writing Baltic levels have now jumped from 100,000mt by ws66.25 to ws77.5 and look likely to push on further. This strengthening is likely to be short lived but rates will remain firm in the 1-5 October window with the possibility of rates pushing on. Suezmax Owners have seen sporadic enquiry this week with rates being concluded at 135,000 mt by w45 for USAC discharge. A build up of naturally placed VLCCs tonnage here will inevitably lead to some discounting, on last done levels which presently stand at US$3.4 to Singapore", Gibson concluded.