India’s basket of crude price not likely to decline in FY25

livemint.com:

NEW DELHI : The price of the Indian basket of crude oil is unlikely to reflect cheap Russian oil prices in the next financial year despite making up a significant chunk of India’s oil imports. The Indian basket of crude oil represents a derived basket comprising of sour grade (Oman & Dubai average) and sweet grade (Brent dated) of crude oil processed in Indian refineries in a ratio of 75.62 : 24.38. Two people aware of the developments said that irrespective of the quantity of Russian oil imports the crude basket price may not include their price as there is no benchmark price of the Russian crude variants.

The price of the Indian basket of crude oil is meant to largely represent the cost of the country’s crude imports. Given that discounted Russian supplies constitute a large part of the total imports, the actual cost of the imports would be lower than the price represented by the Indian basket. After India became a major buyer of Russian oil in FY23 backed by deep discounts post sanctions imposed by the West, there were expectations that the ratio for the calculation of the basket price would be revised to include Russian supplies.

It was not included in this fiscal and there were expectations of its reflection when the change is made for FY25. “Going ahead also the crude basket price will not reflect the Russian imports as there is no benchmark price of those crudes. Russian crude is not traded on the exchanges.

How does one benchmark them? There would be a slight revision in the basket price ratio. But, it would only include the price of the existing Brent, Oman and Dubai crudes," said one of the two people mentioned above. The other person said: “Refiners are buying Russian oil at discounted rates and there is no