Indian Refiners Face Premium Crude Oil Prices as Global Supplies Tighten
Indian refiners are facing high premiums for crude oil due to tighter physical supplies and increased bargaining power of suppliers. The cost of crude for Indian refiners is rising faster than global benchmarks, with Brent futures surging by approximately $10 a barrel over the past two weeks, surpassing $91 a barrel on Tuesday.
The physical crude markets are under pressure, leading to costly spot purchases to secure Gulf supplies. Suppliers from the Gulf are demanding premiums of $3-4 a barrel over the Dubai-Oman benchmark, which itself is priced at a premium of $6-7 a barrel to Brent. This results in an effective price of Gulf crude for Indian refiners being around $10 a barrel higher than Brent.
Saudi Aramco's official selling prices for various crude grades offer limited relief, as they remain $1.5-3 a barrel below Dubai-Oman. Disruptions in the Red Sea and the Strait of Hormuz have diminished the availability of crude under term contracts, forcing Indian refiners to rely on the spot market.