Spot Crude Premiums Fall Despite Brent Rally To $120

The cost of buying spot crude oil for immediate delivery has declined sharply from March levels, easing some pressure on state-run oil marketing companies (OMCs) even as Brent crude prices climbed to around $120 per barrel.

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Refining officials said lower spot premiums across major supply regions have partly offset the rise in global benchmark crude prices triggered by disruptions in West Asia.

Brent crude touched nearly $120 per barrel this week, its highest level in around four years, amid continued tensions in West Asia and disruptions to global energy supplies.

West African, Russian Crude Premiums Decline

According to refining sources and traders, premiums on West African crude have dropped by more than 50% compared with March levels.

Spot premiums for West African cargoes are currently in the low teens, or around $13 per barrel above Dated Brent, compared with $20-30 per barrel recorded in March after supply disruptions intensified.

Before the outbreak of conflict in West Asia, premiums on such cargoes were usually limited to a few dollars per barrel and occasionally traded at discounts. Premiums on Russian crude oil have also moderated sharply.

Officials and Kpler data calculations showed Russian crude premiums have fallen to below $5 per barrel on a delivered basis against Dated Brent, compared with more than $10 per barrel in March. Russian crude had traded at discounts of $2-4 per barrel last year.

Russia remained India’s largest crude supplier in March, accounting for around 45% of the country’s total crude imports of 4.45 million barrels per day (bpd), according to Kpler data.

Alternative Supply Routes Improve Availability

Refining officials said crude availability improved due to increased supplies routed through alternative channels in West Asia, along with higher imports from Africa and Venezuela.

The U.S. administration also extended a sanctions waiver on Russian crude exports until mid-May after initially allowing temporary relief in March to stabilise global oil supplies disrupted by the conflict.

India resumed higher imports from multiple regions as supply chains adjusted to restrictions affecting shipments through the Strait of Hormuz.

Saudi Oil Prices Expected To Ease

India is also expecting Saudi Arabia to lower official selling prices for June crude cargoes after sharply increasing premiums for May supplies.

Saudi Aramco had raised prices for Arab Light crude supplied to India by $19.50 per barrel for May loadings compared with April levels, company data showed. Saudi Arabia remained India’s second-largest oil supplier in April, shipping around 7 lakh bpd, according to shipping data.

Officials also said the Platts Dubai/Oman benchmark, which is used to price most West Asian crude grades, has stabilised after surging to $145-160 per barrel during March. The benchmark is now trading at levels comparable to or below Brent crude oil prices.

India’s Crude Imports Stay Stable

India imported around 44.5 lakh bpd of crude oil in April, largely unchanged from March levels, according to Kpler data. However, imports remained nearly 8 lakh bpd lower compared with February, before the escalation of conflict in West Asia disrupted shipping routes through the Strait of Hormuz.

The Strait of Hormuz previously handled a significant portion of India’s crude imports from West Asia and remains one of the world’s most important oil transit routes.