The biggest Indian state refiners have asked one Middle Eastern exporter to offer alternative price quotes for its crude as India is scrambling for the cheapest possible supply amid soaring oil and shipping prices after the U.S. sanctions on Russia’s oil trade.
Indian Oil Corporation, Hindustan Petroleum Corporation Limited (HPCL), and Bharat Petroleum Corporation Ltd (BPCL) have asked Abu Dhabi’s state giant ADNOC to provide pricing on a delivered-at-port (DAP) basis, in addition to the free-on-board (FOB) basis, which the exporters in the Middle East use in their term supply, refining sources told Reuters on Monday.
‘Delivered at port’ in crude trade includes the seller bearing the insurance, shipping, and other services costs.
Since the U.S. sanctions on Russian oil tankers, traders, companies, and insurers, tanker rates have doubled in one week and oil prices have rallied to a four-month high.
For India, which imports more than 80% of the crude it consumes daily, the costs are spiking and the cheap Russian barrels are disappearing as Indian refiners steer clear of tankers explicitly sanctioned by the U.S.
So refiners are seeking cheaper supply from the Middle East, asking for price quotes on a delivered-at-port (DAP) basis from ADNOC, and planning to do so with Saudi Aramco, too, according to Reuters’s sources.
“We want our term supplier to give both FOB and DAP quotes,” one of these sources told Reuters.
“There is a possibility we may get better pricing in DAP, especially when freight rates are going to go up.”
India has been receiving Russian crude on a DAP basis and since the Russian invasion of Ukraine and the sanctions and embargos on Russian oil, Russia has become the single-biggest supplier of crude oil to India, the world’s third-largest crude importer.
However, ADNOC and other Middle Eastern producers have very rarely sold their crude on a DAP basis.
Source: By Charles Kennedy from Oilprice.com