Saudi cuts Asian Premium after India taps Russian oil
NEW DELHI : Saudi Arabia, the world’s second largest oil producer, has slashed the premium charged on exports to India while many others have discontinued it altogether, a person aware of the matter said, after India began sourcing the bulk of its energy requirements from Russia. Asian premium is an extra amount levied by the Organization of the Petroleum Exporting Countries (Opec) from Asian countries above the actual selling price. India has repeatedly pressed oil producers to eliminate this premium and even asked for an ‘Asian discount’ instead.
Saudi Arabia has now reduced the premium to $3.5 per barrel from around $10 in the past year, the person said. “Some suppliers are giving discounts; some are charging a premium, and you buy less from them. Currently, the premium is $3.5 per barrel.
Saudi is levying the premium on the OSP (oil selling price). The United Arab Emirates (UAE) is not charging," the person said on condition of anonymity. “Imports have already declined.
Both the public and private sector will buy oil from wherever they get it cheapest," the person added. Top Asian buyers China and India, the second and third largest importers of crude oil globally, boosted imports from Russia after the country offered deep discounts following its war in Ukraine. In the first quarter of 2023-24, oil imports from Russia stood at $12.36 billion, 171% higher from a year earlier, while Saudi Arabia slipped to the third position as supplies declined 24% to $5.49 billion.
Imports from the UAE slumped 63% to $1.71 billion. Iraq, which has offered discounts as well, was the second largest supplier in value terms at $6.55 billion. The supplies, however, still declined by 38%.
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