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Indian Refiners Face Rising Crude Costs Amid Middle East Disruptions
Indian oil companies buy crude oil to make fuels such as petrol and diesel.
Recent problems in the Middle East have made some oil shipments harder to obtain.
Because fewer barrels are readily available, sellers are charging higher prices.
Some Indian refiners are paying 35%-40% more than they did about six weeks ago.
A few urgently needed shipments reportedly cost as much as $150 per barrel.
A Saudi pipeline shutdown has also made transportation more difficult.
India is buying oil from several other regions, including Russia, the Americas and Africa.
Those longer journeys can cost more because of shipping and insurance.
The International Energy Agency says global oil inventories have dropped substantially since the conflict began.
Some Indian refiners are paying 35%-40% more for crude than six weeks ago, with costs reaching nearly $120-$130 per barrel.
Certain prompt cargoes have reportedly sold for as much as $150 per barrel as buyers compete for immediate supplies.
The shutdown of Saudi Arabia’s 1,200-kilometre East-West pipeline has increased concerns about transport routes and Strait of Hormuz dependence.
India is turning to supplies from Russia, the United States, Brazil, Guyana, West Africa, Iraq and the United Arab Emirates, but freight and insurance costs are rising.
The International Energy Agency estimates global oil inventories have fallen by about 507 million barrels since the conflict began.
- Who
- Indian oil marketing companies and refiners, traders, Saudi Arabia and the International Energy Agency.
- What
- Crude procurement costs for Indian refiners have risen sharply as Middle East disruptions tighten physical oil supplies.
- Where
- The disruptions affect Middle Eastern supply routes, including Saudi Arabia’s East-West pipeline and the Strait of Hormuz; the impact is being felt by refiners in India.
- When
- Costs are reported to have risen over roughly six weeks; Saudi imports cited in the report were measured in August, and inventories have fallen since the conflict began.
- Why
- Reduced availability of physical barrels, transport disruptions and stronger competition for replacement cargoes are increasing crude, freight and insurance costs.
Key facts
- Recent crude cost increase
- Some refiners are paying 35%-40% more than around six weeks ago.
- Reported purchase cost
- Nearly $120-$130 per barrel, compared with Brent prices of about $105-$109.
- Highest prompt cargo price
- Some immediate shipments reportedly reached $150 per barrel.
- Saudi pipeline
- The East-West pipeline is 1,200 kilometres long and has capacity of about five million barrels per day.
- India’s Saudi imports
- Saudi Arabia supplied about 315,000 barrels per day of India’s crude imports in August.
- India’s total crude imports
- India imported nearly 4.7 million barrels per day in the cited August comparison.
- Global inventories
- The International Energy Agency estimates inventories have fallen by about 507 million barrels since the conflict began.
Quotes
Refinery executive
An unnamed refinery executive quoted in the NDTV Profit report
“Every trader is asking for a premium.. We are now paying at least 35%-40% more than benchmark rates.”
freepressjournal.in
Sources
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