Crude Costs Surge as Gulf Premiums Rise

Indian refiners are facing a surge in crude oil costs due to tightening physical supplies and rising premiums for Gulf and West African barrels. The cost of Brent futures has gained about $10 a barrel in the past two weeks, trading above $91 a barrel on Tuesday.

The situation is driving suppliers to charge higher premiums, pushing Indian refiners towards the costly spot markets to secure supplies from the Gulf. Suppliers are demanding $3-4 a barrel over the regional Dubai-Oman benchmark, which itself is trading at a $6-7 premium to Brent.

This puts the effective cost of Gulf crude at about $10 a barrel above Brent for Indian refiners. Term-deal supplies have been curtailed due to disruptions in the Red Sea and Strait of Hormuz, forcing refiners to turn to the spot market.