Indian crude oil basket price slips below US$ 30 per bbl

Indian crude oil basket price was US$ 111.23 as on August 30, 2012 and from this level the prices have come down by nearly 74%.

The sluggish economic activities in China are strongly expected to affect the crude oil demand in emerging economies. The anticipation of declining Chinese demand for crude oil has sent the crude oil prices below 12 years low of nearly US$ 30 per bbl. The Indian crude oil basket price is a clear beneficiary and has slipped below US$ 30. For January 7, the Indian crude oil basket price was quoted at US$ 29.24 per bbl (Rs. 1,956.65).

According to Bloomberg data, the Indian crude oil basket price was US$ 111.23 as on August 30, 2012 and from this level the prices have come down by nearly 74%.

The Indian crude basket is used as an indicator of the price of crude imports in India, and is one of the elements watched by the Indian government when deciding on domestic price issues.

There are mainly three crude oil baskets: Indian crude oil basket, Nymex WTI basket and OPEC basket. Despite the Nymex Oil basket prices are cheaper than Indian crude basket prices the Indian refiners mainly prefer to purchase oil at Indian crude basket prices that are linked to the Brent crude oil.

As the price difference between WTI crude and Brent crude is a short-term phenomenon, Indian crude oil importers prefer Indian crude oil basket because in any case, loading, inland movement and a longer ocean voyage involved in buying American crude oil narrows down the price difference to a point where it is not worthwhile.