India, which sources 85 per cent of its crude oil supplies from OPEC member countries, wants producers to offer discounts rather than charge a premium, as today it has become buyer’s market.

Demand-supply equation B Ashok, Chairman of country’s largest public sector oil refining-cum-retailing entity Indian Oil Corporation, said: “The dynamics of business have changed. It is no longer a supplier’s market, but it is a buyer’s market. Today we (Asian refiners) should get a discount rather than paying a premium.”

Ashok told BusinessLine that the direction of crude flow from West Asia has now shifted to Asia. Besides, with OPEC deciding not to reduce production, there is a tilt in the demand-supply balance.

Crude import India’s total crude oil import from all sources (including OPEC) stood at 189.4 million tonne in 2014-15 worth $112.7 billion (₹6,87,350 crore), while during April-May 2015-16, the imports were 48.2 million tonne costing $20.2 billion (₹1, 27,956 crore). The premium varied from contract to contract but it was $4-5 a barrel.

Earlier, crude flow was from West Asia to North America and the pricing also depended on the market. Now, with the shale revolution, the flow has shifted to Asia.

Also, as the American and European markets have got multiple sources, the price is determined on the basis of that. For Asian markets, with no big producers, the proximity to West Asia made it the determining factor, Ashok explained.

“…there could have been times when price for the Asian markets was probably a little more than the North American or European markets, which was typically called the Asian Premium.

“But since the flows have now changed, we are observing in the last few months that the prices we seem to be getting are better than the other markets,” he pointed out. At the recent OPEC meeting in Vienna, Petroleum and Natural Gas Minister Dharmendra Pradhan, while pointing to the shift in market dynamics, had said there is an urgent need to correct the price mechanism.

India’s stand Pradhan had said that there was a strong feeling that countries like India should get an Asian dividend rather than having to pay an Asian premium for bulk purchases.

“I will not hesitate to say that the Asian Premium was historically never justified and so not justifiable in the changed market scenario where Asian countries are the major buyers.

“Any measure that erodes the advantage of geography for Asian countries and promotes a policy of subsidising oil traffic to distant destinations is not, and cannot be, in the interest of sustainable development,” he said.

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