Middle East war: Indian refiners forced to buy oil at premium; Russian discounts vanish
Indian oil refiners are facing increased costs as global supply disruptions and geopolitical tensions in the Middle East drive up premiums for crude oil. Discounts on Russian oil have vanished, forcing refiners to rely on expensive spot market purchases from the Gulf.
Why it matters
Rising energy costs for a major importer like India can lead to inflationary pressures and impact the broader national economy.
Indian refiners are getting crude at high premiums, a contrast to the situation a few weeks ago when global oil prices had dropped. In fact, the price that Indian refiners are paying for crude is increasing more rapidly than global benchmarks.This is because tighter physical supplies have pushed up premiums for oil barrels from the Gulf and West Africa. At the same time, discounts on Russian crude have disappeared, while the price advantage on Venezuelan oil has narrowed considerably.Brent futures have risen by around $10 a barrel over the past two weeks, moving above $91 a barrel on Tuesday.Physical crude markets under pressurePhysical crude markets are under greater pressure which has strengthened the bargaining position of suppliers and forced Indian refiners to increasingly turn to expensive spot purchases to secure Gulf supplies.Also Read | How long can the world & India absorb the US-Iran war oil shock?"Every trader is asking…
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