This has been done to reflect India’s underlying realities in crude imports, according to government data, industry officials and shipping data.
The new formula also correctly signals the general direction of India’s crude imports and the underlying pricing benchmarks after being out of sync with actual import trends for the last three years.
The new Indian crude oil basket formula in March comprised 61 per cent weight to European benchmark Dated Brent, a light, sweet crude oil grade of premium quality, and 39 per cent to the average of Oman and Dubai oil benchmarks, sour grades containing higher sulphur and typically cheaper than sweet crude oil.
The ratio changed from a weight of 79 per cent given to Oman/Dubai and only 21 per cent to Brent in 2024-25 and 2025-26 until February.
Weight to Brent was the highest prior to 2006 at 43 per cent, PPAC data showed.
“India’s diversification in crude oil purchases is being reflected in the new crude price formula,’’ said Prashant Vasisht, senior vice-president at ratings agency ICRA, a Moody’s affiliate.
It added, “The Indian basket was not reflective of the diversification during the past three years.’’
Russian oil comprised 35 per cent for the last three years and it is typically priced of Brent, he added.
This is the first time the formula was changed mid-way, an official involved with petroleum statistics told Business Standard.
Typically, a committee meets to decide the ratio, which changes once a fiscal or once in many fiscals, another official said.
“Normally, they (changes) are not done between a month. But this time, as a special case, it had to be resorted to,’’ he added, declining to give details.
The Indian crude cocktail is a free on board (FOB) price, excluding freight, insurance and other charges, published to represent an indicative price for Indian imports.
The reason for the sudden change, the official said, was that under the old formula, the Indian crude basket surged to as high as $156 a barrel. This did not accurately represent the prices Indian refiners were paying for the oil and from where it was sourced.
In March, India bought a record low 910,000 barrels per day from West Asia, typically benchmarked off Dubai/Oman, after Iran virtually shuttered the Hormuz. This compares to 3 million bpd in February from the region, according to Kpler data and a senior refining official, prompting a rework in pricing weights.
PPAC could not be reached for comment.
“The basket is relevant because it’s a representation of the actual crude cost,” said R Ramachandran, former refinery director at Bharat Petroleum and an industry consultant.
“In India, we buy a mix of crudes; some may be cheaper or costlier. When I have an index that represents what it is to my country, in the context of using strategy pricing and crude pricing, a crude basket becomes essential.”
Since 2013-14, the government gave a weight of over 70 per cent for the Oman/Dubai benchmark in the Indian crude oil price basket, reflecting the general trend of India’s oil imports.
However, since Russia invaded Ukraine in February 2022, the basket was untethered to India’s actual crude imports, shipping and Customs data showed, and industry officials said.
In the last three years, PPAC increased the ratio of Dubai/Oman to a record 79 per cent and reduced Brent to 21 per cent. During that period, over 50 per cent of India’s oil imports were actually priced off Brent after a surge in Russian oil purchases, according to Kpler and two traders from refiners.
“There’s relevance for the crude basket if it is properly updated,” Ramachandran added.
Dated Brent is the price for a cargo with a loading date in the next few weeks.
Dubai and Oman are spot price markers for crudes shipped to Asia.
While the new formula still doesn’t capture the exact ratio of how India’s crude oil is priced, nor does it account for the discounts or premiums charged, the basket signals the right direction now, the official said.
In March, imports from West Asia, pegged to the Dubai/Oman benchmark, accounted for only 16 per cent, nearly a third of flows in pre-war February.
The rest was sourced from Russia, Africa, and the Americas, on Brent basis, according to Kpler data.
Prior to 2023, the Indian crude basket broadly reflected the direction of Indian crude imports at 75 per cent Dubai/Oman and 25 per cent Brent, in line with India buying over 60 per cent of its oil from West Asia during that period.
But the sourcing dynamics changed after the Russian invasion of Ukraine in 2022, which PPAC’s crude oil basket did not capture.
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