India’s Crude Import Benchmark Surges Above $100 as Middle East Conflict Deepens

India’s average crude oil import price crossed the $100 per barrel mark at the end of last week and is expected to rise further this week as international oil prices strengthen amid escalating hostilities in the Middle East.

The Crude Oil FOB Price, representing India’s basket of sweet and sour crude grades, climbed to $101.07/bbl on Friday, marking the first time it has moved above $100/bbl since May, according to data from the Indian Oil Ministry’s Petroleum Planning and Analysis Cell (PPAC).

The Indian crude basket is calculated using an average of Dated Brent, representing the sweet-grade benchmark, and the Oman-Dubai average, representing the sour-grade benchmark, based on crude imported by Indian refineries.

As of Monday, India’s crude basket had averaged $99.38/bbl in September, compared with $83/bbl in June, $82/bbl in July and $90/bbl in August.

The benchmark crossed the $100 level in early September as international crude prices rallied following renewed military escalation between the US and Iran, with the two sides continuing to exchange attacks for more than a week.

Higher freight costs add to India’s import burden

India’s crude import costs have also increased due to lower oil flows from the Middle East and growing risks to shipping through the Strait of Hormuz.

Freight rates on the key route from Ras Tanura in Saudi Arabia’s Persian Gulf to India have surged by more than 400% since February 28, when the conflict began and Iran closed the Strait of Hormuz.

The combination of higher crude prices and rising freight costs has significantly increased India’s oil import bill.

India paid around 60% more for crude imports in the April-June quarter compared with the same period a year earlier, as higher oil prices more than offset the decline in import volumes.

The upward pressure continued into the third quarter, with India’s July crude import bill rising 41% year over year.

With international oil prices remaining elevated and shipping risks continuing across the Middle East, India’s crude import costs are likely to remain under pressure in the near term.

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