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The Print
33 minutes ago
- The Print
Indian refiners can do without Russian oil, but with trade-offs
US President Donald Trump last week announced an additional 25 per cent tariff on US imports from India — raising the overall duty to 50 per cent — as a penalty for the country's continued imports of Russian oil. Russian crude supports high distillate yields – the share of crude converted into fuels like petrol, diesel, and jet fuel through distillation. Replacing Russian crude, which accounts for up to 38 per cent of India's refinery intake, with alternatives will shift yields, resulting in lower middle distillates (diesel and jet fuel) and higher residue outputs, according to global real-time data and analytics provider Kpler. New Delhi, Aug 10 (PTI) Indian refiners, the world's biggest user of Russian oil, can operate without supplies from Moscow from a technical standpoint, but the shift would involve major economic and strategic trade-offs, analysts said. Since the steep tariffs are likely to hit the USD 27 billion of non-exempt exports that India does to the US, there has been chatter around stopping or curtailing oil imports from Russia. 'Indian refiners can operate without Russian crude from a technical standpoint, but the shift would involve major economic and strategic trade-offs,' Kpler said in a report, 'US Tariffs on Indian Imports: Implications for Energy Markets & Trade Flows'. India turned to purchasing Russian oil sold at a discount after Western countries imposed sanctions on Moscow and shunned its supplies over its invasion of Ukraine in February 2022. Consequently, from a mere 1.7 per cent share in total oil imports in 2019-20 (FY20), Russia's share increased to 35.1 per cent in FY25, and it is now the biggest oil supplier to India. In terms of volume, India imported 88 million tonnes from Russia in FY25, out of the total shipment of 245 million tonnes. In July, India received 1.6 million barrels per day of crude from Russia, ahead of China's nearly 1 million bpd and Turkey's around 5,00,000 bpd. Kpler said deep discounts and strong compatibility with India's refining systems led to a surge in imports of Russian Ural crude oil. 'Russian crude supports high distillate yields (diesel and jet fuel) and is ideally suited to India's advanced refining infrastructure. It has enabled both state-owned and private refiners to operate above nameplate capacity while maintaining strong margins. 'A reversal of this will result in a mild yield shift (lower middle distillate yields, higher residue yields) and probably a small reduction in primary throughput rates, as margins will no longer command a sizeable premium against regional benchmarks, considering existing discounts on Russian oil,' Kpler said. The Indian government has issued diplomatic but firm responses to the US tariffs, emphasising the importance of maintaining energy security. 'Should Russian oil become inaccessible, India could face an additional USD 3-5 billion in annual import costs (based on a USD 5 per barrel premium on 1.8 million bpd). If global prices rise further (a scenario in which Russian crude exports are being curtailed, in the absence of sufficient buying interest from India), the financial burden could increase significantly,' the report said. This may prompt the government to cap retail fuel prices, which could strain fiscal balances. A spike in the import bill could even lead to a reduction in overall crude purchases. India's limited storage capacity further constrains its ability to manage such disruptions. While Russian flows to India continue under a 'business-as-usual' stance, the escalating US rhetoric has reopened conversations about supply diversification, with some Indian refiners reportedly booking increased volumes of Middle Eastern crude. According to Kpler, replacing 1.8 million barrels per day (bpd) of Russian crude would require a multi-regional approach. The Middle East remains the most viable option operationally, grades such as WTI Midland from the US could contribute 2,00,000-4,00,000 bpd. These (US crude) are lighter and yield less diesel, a disadvantage for India's distillate-heavy demand. Long-haul freight and cost considerations will also restrict scalability, it said. West Africa and Latin America (LatAm) crudes offer moderate potential. 'A balanced replacement strategy may involve 60-70 per cent of substitute volumes from the Middle East, with US and African/LatAm crudes serving as tactical fillers. Nevertheless, none match Russian barrels in cost, quality, or reliability (some of the Russia-to-India barrels have already been contracted under term agreements),' it noted. According to Kpler, Indian refiners can technically adapt to the loss of Russian barrels, but with significant economic consequences. 'Replacing 1.7-2.0 million bpd of discounted, medium-sour crude would erode refining margins and misalign product yields. Lighter substitutes like WTI or West African grades produce more gasoline and naphtha, reducing diesel output and hurting both domestic and export economics.' Even Middle Eastern grades, while closer in quality, are priced tightly to official selling prices (OSP), leaving limited arbitrage opportunities. 'In addition to higher feedstock costs, Indian refiners would face elevated freight and credit charges,' it said. 'The transition is commercially painful, even if technically feasible.' PTI ANZ BAL BAL This report is auto-generated from PTI news service. ThePrint holds no responsibility for its content.
Economic Times
an hour ago
- Economic Times
CPI Inflation hits 8-year low, Highway Infra IPO sees biggest 2025 listing gain
On Two Sharp with ET, Nisha Poddar breaks down India's inflation plunging to an 8-year low at 1.55% in July, giving the RBI breathing space to boost growth. Plus, Highway Infrastructure smashes records with a 67% jump on debut, making it 2025's best IPO listing gain so far. Show more 01:40 04:37 01:30 06:15 03:33 06:14 04:09 01:37 05:22 01:19 03:53 06:23 01:23 05:15 03:42 01:51 04:46 01:43 01:48 01:31 01:31 06:54 01:21 04:20 06:09 06:11 05:09 01:22 04:21 03:33 04:35 02:26 01:57 04:06 01:29 01:33 04:25 03:59 07:10 01:56
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Business Standard
an hour ago
- Business Standard
India's retail inflation eases to eight-year low of 1.55% in July
India's retail inflation cooled to an eight-year low of 1.55 per cent in July from 2.1 per cent in June, aided by a deepening deflation in several food items even as prices of edible oils surged at a pace not seen since the onset of the Russia-Ukraine conflict in early 2022. Retail prices rose 1.18 per cent in rural India, and 2.05 per cent in urban areas. The last time the Consumer Price Index (CPI) had been this benign was in June 2017, when it recorded a 1.46 per cent uptick. Economists expect consumer demand to pick up in light of the mild inflation trend, and reckon that monetary policy actions will hinge on the trajectory and outlook for prices and economic growth. The latest inflation print is in sync with the downward revision in inflation projections made by the Reserve Bank of India (RBI) last week, with the average price rise pace for 2025-26 (FY26) pegged now at 3.1 per cent from 3.7 per cent. While consumer prices rose an average 2.69 per cent in the first quarter of this fiscal year (Q1FY26), the RBI expects Q2 price rise to average 2.1 per cent, before rising to 3.1 per cent in Q3 and 4.4 per cent in Q4. Headline inflation for Q1FY27 is projected at 4.9 per cent by the RBI's Monetary Policy Committee (MPC) which unanimously decided to keep the policy repo rate unchanged at 5.5 per cent while maintaining a neutral monetary stance at its review meeting that concluded on August 6. Data released by the National Statistics Office (NSO) on Tuesday showed that food inflation, which had turned negative in June, declined by another further 1.8 per cent in July. This was largely driven by a 20.7 per cent year-on-year (y-o-y) drop in vegetable prices, the sharpest pace of decline since September 2021. Pulses prices also fell 13.76 per cent (y-o-y), the steepest dip in over seven years. Spices and meat, which together have a 7.5 per cent weightage in the CPI, also saw prices drop 3.07 per cent and 0.61 per cent, respectively. Moreover, the pace of price rise decelerated for some items in the food basket, including cereals (3.03 per cent), eggs (2.26 per cent), milk (2.74 per cent) and sugar (3.5 per cent). However, prices for edible oils rose a sharp 19.24 per cent, marking the ninth straight month of double digit inflation and the highest uptick since March 2022. Fruit prices also perked up 14.42 per cent, making July the seventh consecutive month of over 10 per cent price rise for the category. Fuel inflation also accelerated slightly to 2.67 per cent. Core inflation which excludes volatile segments such as food and energy, declined to 4.1 per cent during the month, led mainly by a moderation of inflationary pressures in transport (2s.12 per cent), recreation (2.38 per cent), clothing (2.58 per cent), housing (3.17 per cent) and education (4 per cent). Paras Jasrai, associate director, India Ratings says that the benign inflationary trend is quite favourable especially for a sustainable improvement in consumption demand. However, the future course of monetary policy would be dependent on how the inflationary trajectory pans out in the next few months. 'We believe there is some scope for further monetary easing (maximum 50 basis points). However, this may unfold if the impact of tariff war on the Indian economy becomes too adverse,' he added. Among 22 major states and union territories (UTs) having a population of more than 5 million for which data is available, 11 states/UTs recorded an inflation rate which was higher than the national average. Kerala recorded the highest retail inflation of 8.89 per cent in July, while Assam (-0.61 per cent), Bihar (-0.10 per cent), Orissa (-0.30 per cent) and Telangana (-0.44 per cent) recorded deflation. Rajani Sinha, chief economist, CareEdge Ratings says that food inflation is likely to remain contained, supported by healthy agricultural activity and a favorable base. The good progress of monsoon, adequate reservoir levels, and strong kharif sowing bode well for agricultural output and food price stability, she noted. 'While global commodity prices are broadly expected to remain stable, intermittent spikes cannot be ruled out amid ongoing geopolitical tensions. Concerns over potential US secondary sanctions on Russian crude could disrupt supply chains for major importers such as India and China. Although OPEC has spare capacity, global oil dynamics could shift and will need close monitoring,' she added. 'We expect inflationary momentum to rise in the second half of the fiscal year as the favorable base effect wanes. Accordingly, we do not anticipate further rate cuts unless economic growth weakens significantly,' said Sinha. In its August review, the RBI's MPC had kept the FY26 GDP growth projection unchanged at 6.5 per cent, with Q1FY27 growth pegged at 6.6 per cent.
