MOSCOW/NEW DELHI, May 12 (Reuters) – Premiums for Russia’s Urals crude oil in India have declined as refiners cut purchases amid weak refining margins, three traders said.
Russian Urals crude for delivery to Indian ports in June is trading at a premium of $2–4 a barrel to Brent, down from $6–7 a barrel for May‑delivery cargoes, traders said.
Urals has traded at a premium to Brent in Indian ports since early March, after the U.S.-Israeli war on Iran disrupted oil flows through the Strait of Hormuz.
However, traders said Urals prices are unlikely to slip back to a discount in Indian ports in the near term, as the Asian oil market has dried up due to the Iran war.
A virtual halt to tanker traffic through the Strait of Hormuz, a chokepoint for Middle Eastern oil exports, limits the availability of Gulf crude, making Asian refiners hungry for alternatives, including Russian grades, traders said.
India, one of the world’s largest oil importers, is facing economic pressure from higher crude and fuel prices, while the government has kept domestic petrol prices unchanged. India’s fuel demand was down 4.6% in April from the same month last year.
Prime Minister Narendra Modi on Sunday urged a spate of measures including fuel conservation as the surge in global energy prices puts pressure on India’s foreign exchange reserves.
Spot premiums for Russia’s Far East ESPO Blend crude delivered to China in June have also eased, as weak refining margins curbed demand from independent refiners.
(Reporting by Reuters reporters in Moscow and Nidhi Verma in New Delhi; Editing by Kevin Liffey)
