Freight shock pushes West Asia crude landed cost for India to $120/barrel
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- ✓Freight shock pushed the landed cost of West Asian crude for India to $120 per barrel.
- ✓Rising tanker rates and shipping disruptions are squeezing refining margins by $10-15 a barrel.
- ✓Analyst Natalia Katona said, "Freight has become a major factor in refinery margins," as costs for oil shipments surged recently.
Story at a Glance
- Category
- MARKET
- Reported By
- Financial Express
- Reading Speed
- 4 Minute(s)
- Market Focus
- India Economy
Indian refiners face rising landed costs of West Asian crude at $120 per barrel due to surging tanker freight rates and shipping disruptions that are squeezing refining margins by $10-15 a barrel. Freight hikes from Gulf routes and war-risk concerns are major contributors to increased costs.
"Freight has become a major factor in refinery margins. Market participants tend to focus on benchmark crude prices when calculating refined product crack spreads, but freight absorbs a substantial part of those implied margins," Abu Dhabi-based commodity analyst Natalia Katona said. "I would estimate that freight costs are now reducing refining margins by around $10-15/bbl compared with what calculations based solely on crude prices would suggest."
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