Saudi Arabia, the world’s second largest oil producer, has slashed the Asian premium charged on exports to India while many others have discontinued it altogether after India began sourcing the bulk of its oil requirements from Russia.
Key points
- Asian premium is an extra amount levied by the Organization of the Petroleum Exporting Countries (OPEC) from Asian countries above the actual selling price.
- India has repeatedly pressed oil producers to eliminate this premium and even asked for an ‘Asian discount’ instead.
- Saudi Arabia has now reduced the premium to $3.5 per barrel from around $10 in the past year.
- Saudi is levying the premium on the OSP (oil selling price). The United Arab Emirates (UAE) is not charging.
- Top Asian buyers China and India, the second and third largest importers of crude oil globally, boosted imports from Russia after the country offered deep discounts following its war in Ukraine.
- About 85% of India’s total energy requirement is met through imports.
