In the global market, price of crude oil is expressed for two varieties – West Texas Intermediary (WTI) and Brent. These two are different in terms of the Sulphur content. In India, the Petroleum Ministry follows an indigenously designed crude basket known as Indian Crude Basket.
How the price of Indian Crude Basket is calculated?
The Indian Crude Basket is a weighted average of the prices of Oman and Dubai sour crude price benchmark; and the Brent sweet crude price benchmark. Crude oil with high amount of Sulphur is termed as sour and with less Sulphur is called the sweet grade. Sour grade crude requires extra processing cost.
The weightage for Oman and Dubai sour grade is 68.2 per cent (with a roughly equal distribution i.e. 34.1 per cent, between themselves) while the rest – i.e. 31.8 per cent is for Brent (dated) sweet crude price benchmark. The Oman and Dubai is a slightly lower grade than WTI or Brent.
The price of Indian Basket is updated on the site of Petroleum Planning and Analysis Cell.
The price of Indian Basket published by Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas was US$ 126.36 US $/1 Barrel (bbl) on 07.03.2022. The price was $139.2 for Brent variety on the same day. The rising crude trend was mainly due to the potentioal supply diruptions from the Russian invasion of Ukraine.
Use of Indian crude basket
The Indian Crude basket is used as an indicator of the price of crude imports in India. similarly, it is one of the elements watched by the Indian government when examining domestic price issues.