{"id":323097,"date":"2025-01-11T18:22:28","date_gmt":"2025-01-11T12:52:28","guid":{"rendered":"https:\/\/forumias.com\/blog\/?p=323097"},"modified":"2025-01-11T18:22:28","modified_gmt":"2025-01-11T12:52:28","slug":"rising-crude-prices-impact-india-and-refiners","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/rising-crude-prices-impact-india-and-refiners\/","title":{"rendered":"Rising crude prices impact India and refiners"},"content":{"rendered":"

Source<\/strong>: The post Rising crude prices impact India and refiners has been created, based on the article \u201cFROM RUSSIA WITH LOVE: Indian refiners may face a windfall this year from falling Urals oil rates even as US levies sanctions on Russian firms. Will motorists benefit?<\/strong>\u201d published in \u201cBusiness Standard\u201d<\/strong> on 11th January 2025<\/p>\n

UPSC Syllabus Topic:<\/strong> GS Paper2-International Relations-Effect of policies and politics of developed and developing countries on India\u2019s interests<\/p>\n

Context<\/strong>: The article discusses rising global crude oil prices, India’s reliance on discounted Russian oil, and potential savings for Indian refiners. It highlights uncertainties about US sanctions on Russia, impacts on Indian pump prices, and losses in LPG subsidies for state-run refiners.<\/p>\n

Why are crude oil prices rising?<\/strong><\/h2>\n
    \n
  1. Brent crude oil prices rose by 3% this year, crossing $77 per barrel.<\/li>\n
  2. This increase is due to a harsh northern hemisphere winter, reduced US inventory, lower OPEC production, and expectations of new US sanctions on Russia.<\/li>\n
  3. Seasonal demand and macroeconomic factors have also contributed to the price surge.<\/li>\n<\/ol>\n

    How does India benefit from Russian oil?<\/strong><\/h2>\n
      \n
    1. Russia supplied 1.78 million barrels per day (bpd)<\/strong> of oil to India in 2024, accounting for 38% of India\u2019s total crude imports<\/strong>.<\/li>\n
    2. Urals, Russia’s biggest export and a medium sour crude, made up 1.3 million bpd (28%)<\/strong> of India\u2019s imports.<\/li>\n
    3. Discounts on Urals range from $3 to $20 per barrel<\/strong>, depending on market conditions.<\/li>\n
    4. Russian oil averaged $74.8 per barrel<\/strong> in November 2024, cheaper than Saudi oil at $81.4 per barrel<\/strong>.<\/li>\n
    5. In December 2024, Urals accounted for over 80% of Russian oil shipped to India<\/strong>, showing its profitability for Indian refiners.<\/li>\n<\/ol>\n

      Will sanctions impact India’s imports?<\/strong><\/h2>\n
        \n
      1. The Biden administration imposed stringent sanctions on two Russian state-oil companies, key Russian insurers, and 183 tankers<\/strong>.<\/li>\n
      2. If these sanctions remain, Russian suppliers may need to expand discounts (from the current $3-4 per barrel<\/strong>) to keep Indian refiners buying.<\/li>\n
      3. Similar discounts exceeded $35 per barrel in December 2022<\/strong> after price caps by the US and EU, showing how sanctions influence pricing.<\/li>\n
      4. If India reduces Russian imports, refiners will need to purchase costlier Gulf or US crude, raising overall import costs.<\/li>\n<\/ol>\n

        How might global production affect oil prices?<\/strong><\/h2>\n
          \n
        1. Global oil production is expected to rise by 1.6 million bpd<\/strong> in 2025, with 90% of this growth coming from non-OPEC nations<\/strong>.<\/li>\n
        2. An oversupply of 300,000 bpd<\/strong> (excluding any OPEC production increase) may keep Brent prices lower, with forecasts of $74 per barrel<\/strong> for 2025.<\/li>\n
        3. If Brent averages $74 per barrel, Urals \u2014 trading at a $16 discount<\/strong> \u2014 would cost around $58 per barrel<\/strong>.<\/li>\n
        4. Russian oil exporters are concerned about prices falling to $40-50 per barrel<\/strong>, which is $30 below Russia’s 2025 budget assumptions.<\/li>\n<\/ol>\n

          What is the impact on Indian fuel prices?<\/strong><\/h2>\n
            \n
          1. Since May 2022, India has kept petrol, diesel, and LPG prices unchanged, regardless of global price changes.<\/li>\n
          2. State refiners faced Rs 40,000 crore in losses<\/strong> from LPG sales in 2024-25, and there is no clarity on government compensation.<\/li>\n
          3. Cheaper Urals prices have helped refiners recover losses, but it is unclear if savings will be passed on to consumers through lower pump prices.<\/li>\n<\/ol>\n

            What does the future hold for Russian oil?<\/strong><\/h2>\n
              \n
            1. Russian officials, including Rosneft’s chief Igor Sechin, warn that Urals prices may drop to $40-50 per barrel<\/strong> due to increased global supply.<\/li>\n
            2. Discounts on Urals have narrowed from $37 per barrel<\/strong> (post-Ukraine invasion in 2022) to around $3-4 per barrel<\/strong>in 2024.<\/li>\n
            3. India’s crude basket averaged $79 per barrel<\/strong> (April-December 2024), excluding Russian oil, showing the cost advantage of discounted Urals.<\/li>\n<\/ol>\n

              Question for practice:<\/strong><\/p>\n

              Examine how rising global crude oil prices and sanctions on Russia impact India’s oil imports, refiners’ profitability, and consumer fuel prices.<\/p>\n","protected":false},"excerpt":{"rendered":"

              Source: The post Rising crude prices impact India and refiners has been created, based on the article \u201cFROM RUSSIA WITH LOVE: Indian refiners may face a windfall this year from falling Urals oil rates even as US levies sanctions on Russian firms. Will motorists benefit?\u201d published in \u201cBusiness Standard\u201d on 11th January 2025 UPSC Syllabus… Continue reading Rising crude prices impact India and refiners<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,1235],"tags":[10503,212,239],"class_list":["post-323097","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-international-relations","tag-business-standard","tag-gs-paper-2","tag-international-relations","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/323097","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=323097"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/323097\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=323097"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=323097"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=323097"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}