Indian refiners have access to only limited Iranian volumes compared with Russian oil, and even the barrels on offer come with 'too many hassles'.
'Geopolitical stability could remove the crude oil risk premium.'
Sanctioning Russian oil would have led to a sharp surge in oil prices to above $80 per barrel levels, which would impact pump prices in the US ahead of midterm elections next year.
Most of India's oil supplies are expected to stay safe because of the country's good relations with both Russia and Iran. That would take care of over a third of India's supplies.
Investors and companies should brace for higher commodity prices over the next few weeks in the backdrop of Russian troops attacking Ukraine on Thursday. Meanwhile, US President Joe Biden threatened new sanctions against Russia for an act of aggression against Ukraine. All this, analysts believe, can push prices of key commodities such as crude oil, ammonia, urea, potash, and phosphates higher.
The oil industry experienced three upheavals between 1973 and 1991, which seem to be etched in the memory of the industry's decision makers. Naturally, at the sign of a new crisis, the decision makers like to dip into those tumultuous decades to find ways to deal with the new shock, in addition, of course, to expert reports and forecasts. So, the industry bigwigs turned the pages of history to get a peek into the future of oil price movements after Russia invaded Ukraine in 2022, Israel attacked Gaza in 2023, Iran-linked Houthi rebels pounded tankers crossing the Red Sea in support of Palestine the same year, and Iran rained missiles on Israel in 2024.
Come December, India may have to re-evaluate purchases of Russian oil if a price cap on crude oil proposed by the US and the European Union (EU) comes into effect. That impacts nearly a quarter of India's oil purchases that come at a discount, helping limit marketing losses for India's state refiners and enabling New Delhi to manage inflation by freezing pump prices of motor fuels. In September, India imported 1 million barrels a day or 24 per cent of its overall imports from Russia, which became the biggest supplier of oil to India.
Whatever be India's course of action, it will have an impact on India-Iran ties, notes Aveek Sen.
India will need to travel back in time and seek inspiration from football greats Tulsidas Balaram and Chuni Goswami to deftly dribble around and sidestep the West-imposed price cap on exports of Russian seaborne crude oil. India depends on imported oil to meet 86 per cent of its needs, of which nearly a quarter now comes from Russia. The copious flows are roughly 10 per cent cheaper than competing suppliers helping India save billions of dollars in fuel costs.
'Being financially independent is crucial.' 'This spares women a lot of grief if the marriage, especially in large business families, breaks down.'
The Saudi and Iraq offer to replace Iranian crude supplies comes with a catch: Higher prices for the same quality of crude. The new government will face a tough decision over fuel price hike, says Aveek Sen.
Given that India will get a huge part of its oil supplies from Iran through its government-owned oil PSUs, any unwelcome shocks in global crude rates could be absorbed well enough.
Usually, a fall in oil prices is followed with a cut in retail prices of auto fuels and the government passes on the benefit to consumers. However, Morgan Stanley believes gains this time around will remain capped.
