Fuel prices in the country largely depend on how cheaply India is getting crude oil from the international market. The government and Indian oil companies are constantly trying to bring cheap oil from any corner of the world to the country. After the successful strategy of buying crude oil from Russia at a huge discount, India has now set its sights on Iran. If America extends its relaxation in sanctions on Iran even after August 21, then Indian refineries are fully ready to buy large consignments of cheap oil from there also. This plan of India can benefit the public in the coming times.
India’s stock is completely safe till August
India’s government refinery companies have shown excellent foresight. Sensing the situation of war and tension in the Middle East, big companies like Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum have already secured their crude oil requirement till August. This means that there is going to be no hindrance in the supply of oil in the country. At present the storage of the companies is full, so they are not in a position to immediately take advantage of the 60 days exemption given by America. Despite this, Indian companies are continuously talking to Iranian businessmen, so that as soon as an opportunity arises in the future and a good discount is offered, a deal can be finalized immediately.
Russian crude oil remains the first choice
At present, Russia is proving to be the most profitable deal for Indian refineries. If we look at Kepler’s data, India’s oil import from Russia had reached a record high of 27 lakh barrels per day in the month of June. This month also it is expected to be 26 lakh barrels per day. The biggest reason for this is the bumper discount received from Russia. While Iran is offering a discount of 4 to 5 dollars per barrel on its oil compared to Brent crude, Russia’s Ural crude is being sold at a huge discount of up to 6 dollars per barrel. Competition in the market has increased so much that Saudi Arabia has also made the biggest cut in the prices of its crude oil since the year 2000. But, due to heavy freight costs, Saudi oil is not that attractive for Indian companies, hence the refineries are more inclined towards Russian oil.
Iran’s position in the global market
Following the resumption of safe movement of oil through the Strait of Hormuz and the ceasefire, prices of Middle Eastern crude oil (which is not embargoed) have fallen significantly. Because of this, Iran is finding it difficult to find new buyers for its oil and its profits have also reduced. In such a situation, India is taking a very smart diplomatic and business step. Indian refineries want to ensure that if the sanctions are eased, they are at the forefront of buying cheap Iranian oil when prices become competitive in the market.
Big preparations regarding energy security
Government oil refineries will soon begin the next round of negotiations with suppliers for September delivery. Along with this, India is also keeping a close eye on any possible permanent peace agreement between America and Iran. The strength of relations in the field of energy between India and Iran can be gauged from the fact that there was a special meeting between India’s Petroleum Minister Hardeep Singh Puri and Iran’s Petroleum Minister Mohsin Paknejad at the BRICS Energy Summit held in New Delhi last month. Both the leaders discussed in detail the possibilities of increasing cooperation in the energy sector. It is noteworthy that, before the sanctions were imposed in 2018, Iran was one of the top suppliers to India, meeting about 10 percent of the country’s total oil imports.
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