Containers sit stacked next to gantry cranes at Krishnapatnam Port in Krishnapatnam, Andhra Pradesh, India. (Photographer: Dhiraj Singh/Bloomberg)

Higher Oil Import Bill Weighs on India as Trade Gap Widens

(Bloomberg) -- India’s trade deficit widened the most in three months in April as rising crude prices weighed on the world’s third-biggest oil consumer.

The trade deficit -- gap between exports and imports -- was at $13.7 billion in April, data released by India’s commerce ministry showed on Tuesday. That compares with the $15 billion median estimate in a Bloomberg survey of 27 economists.

Key points from April trade data:

  • Imports rose 4.6% to $39.6 billion
  • Oil imports surged 41.5% to $10.4 billion
  • Exports climbed 5.2% to $25.9 billion

Although overall imports rose at the slowest pace in 16 months, a surge in oil prices pushed the trade gap wider. Brent crude averaged $71.76 a barrel in April, according to data compiled by Bloomberg. It extended gains to above $79 a barrel, the highest since 2014, on Tuesday.

Higher prices of oil -- India’s biggest import -- comes amid weakness in the rupee, driving up import costs. That may also push current-account gap wider and make the economy more vulnerable to rising U.S. interest rates.

What a Weak Rupee and Costly Oil Mean for India:

India’s trade deficit will widen to a four-year high of 6.4 percent of the gross domestic product in the year through March, rising from 6 percent last year, due to rise in oil and gold shipments, according to India Ratings and Research, the local unit of Fitch.

©2018 Bloomberg L.P.