Petroleum Minister Dharmendra Pradhan has said India would coordinate with China and other Asian countries to raise voice against the “Asian premium” being charged by the Organisation of the Petroleum Exporting Countries (OPEC).
Asian Premium is the extra charge being collected by OPEC countries from Asian countries when selling oil. The premium is determined in large part by the official selling prices (OSPs) set by Saudi Arabia, Iran, Iraq, and Kuwait, which supply about 15 percent of the world’s crude among them. They set differential prices against benchmarks on a monthly basis, adjusting them to account for regional variations.
India, which sources 85% 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.
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.
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.
The Organization of the Petroleum Exporting Countries (OPEC) is a permanent, intergovernmental Organization, created at the Baghdad Conference in September 1960, by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela.
Currently, the Organization has a total of 14 Member Countries.
OPEC had its headquarters in Geneva, Switzerland, in the first five years of its existence. This was moved to Vienna, Austria, on September 1, 1965.
OPEC’s objective is to coordinate and unify petroleum policies among Member Countries, in order to secure fair and stable prices for petroleum producers; an efficient, economic and regular supply of petroleum to consuming nations; and a fair return on capital to those investing in the industry.