India’s largest refiners are requesting alternative pricing for crude oil from a Middle Eastern exporter as they seek cheaper supplies amidst rising oil and shipping costs following U.S. sanctions on Russian oil trade.
Indian Oil Corporation, Hindustan Petroleum Corporation Limited (HPCL), and Bharat Petroleum Corporation Ltd (BPCL) have asked ADNOC, the state-owned oil giant of Abu Dhabi, to provide pricing on a delivered-at-port (DAP) basis, in addition to the typical free-on-board (FOB) pricing used by Middle Eastern exporters, refining sources informed Reuters on Monday.
In crude trade, “delivered at port” includes the seller covering the costs of insurance, shipping, and other services.
Since the U.S. imposed sanctions on Russian oil tankers, tanker rates have doubled in just one week, and oil prices have surged to a four-month high.
For India, which imports over 80% of its crude oil, these rising costs are becoming a significant issue. The cheap Russian barrels that were previously available are now scarce as Indian refiners avoid tankers specifically sanctioned by the U.S.
As a result, refiners are seeking cheaper alternatives from the Middle East, asking ADNOC for price quotes on a delivered-at-port (DAP) basis and planning to approach Saudi Aramco with the same request, according to Reuters sources.
“We want our term supplier to provide both FOB and DAP quotes,” one of the sources told Reuters.
“There is a possibility we may get better pricing with DAP, especially as freight rates continue to rise.”
India has been receiving Russian crude on a DAP basis, and since the Russian invasion of Ukraine and the subsequent sanctions on Russian oil, Russia has become India’s largest crude oil supplier. India is the world’s third-largest importer of crude oil.
However, ADNOC and other Middle Eastern producers rarely sell their crude on a DAP basis.
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