Asia will get cheaper ‘Arab Light’ crude
Aramco’s most popular crude grade ‘Arab Light’ will now be available to Asian customers at a premium of just $1 per barrel compared to the Oman/Dubai benchmark. This is a major decrease compared to November rates. At the same time, the prices for the American market have been reduced by $0.5, while the rates for Europe have been kept constant for the time being.
Saudi Arabia became India’s support when supplies from Russia decreased.
India faced challenges in oil supplies in recent months due to US and European sanctions on Russia. Earlier India used to import about 1 million barrels of crude oil daily from Russia, but due to sanctions this supply reduced. At such a time, this price relief from Saudi Arabia has proved to be an important support for India.
Companies like Reliance Industries, Indian Oil, BPCL and HPCL have already started additional purchases of Saudi oil. Reliance, in particular, had recorded an 87% increase in its Saudi imports in October, and is now likely to buy more oil after this new discount.
What benefit will India get from Saudi Arabia’s decision?
India imports about 85% of its energy needs, in which Saudi Arabia plays a major role. In such a situation, this fall in oil prices is a big relief for Indian refinery companies. Reliance Industries, the largest private sector refiner, will be able to increase its profits.
At the same time, the expenses of government companies like Indian Oil, BPCL and HPCL will also reduce. If prices remain stable for a long time, then its positive impact can be seen on the prices of petrol and diesel also. Its indirect benefit for common consumers will be that inflation will be controlled and transportation costs will also be reduced.