Holly Herrera
United States Oil Fund shares (AMEX:USO) fell 4.79% to 126.15 on August 26, even as the broader india crude import bill analysis shows New Delhi still paying sharply more for oil than it did a year ago, squeezed by war risk premiums and soaring freight costs out of the Middle East.
| Price | 126.15 USD |
|---|---|
| Day change | -6.33 (-4.79%) |
| 52-week range | 102.42 – 142.33 |
| RSI (14) | 49.27 |
| Volume | 5,386,181 |
Freight Costs Spiral After Hormuz Closure
The Iran war that erupted in late February has upended the logistics of moving crude to India. Iran's closure of the Strait of Hormuz sent shipping rates on the benchmark Ras Tanura to India route up more than 400%, according to data compiled by the Financial Express. A very large crude carrier hauling oil along that path now costs $4.34 a barrel, compared with just 85 cents before the conflict began.
Refiners have tried to route around the chokepoint, but that has not brought relief. Cargoes moving from Corpus Christi to India now cost $15.86 a barrel to ship, up 150% from $6.35 previously. Suezmax tankers carrying Russian crude from the Baltic port of Ust Luga have seen freight costs more than double, climbing to $19.90 a barrel from $8.40 in February.
War Risk Insurance Reaches Extraordinary Levels
Insuring a single tanker voyage through the Strait of Hormuz has become its own cost crisis. War risk coverage that ran about a quarter million dollars before the war now runs as high as $10 million for one passage. That expense sits on top of already elevated crude prices, since Brent has climbed roughly 25% since fighting began, touching triple digits on several occasions.
Import Bill Keeps Climbing
India paid 60% more for crude imports in the April to June quarter than it did a year earlier, even though import volumes slipped slightly. The trend did not ease as the third quarter opened: July's import bill came in 41% higher than the same month last year. Higher benchmark prices, steeper freight, and costlier insurance are all layered on top of one another, and none show clear signs of retreating.
U.S. Oil Fund Reflects the Broader Price Pressure
USO trades within a 52 week range of 102.42 to 142.33 and currently sits with a relative strength index near 49.27, a neutral reading that suggests the fund is neither overbought nor oversold despite the day's sharp drop. The ETF's swings offer a rough proxy for the crude price volatility that is driving India's import costs higher, even though the fund tracks U.S. benchmarks rather than the Middle Eastern grades India relies on most heavily.
Frequently Asked Questions
Does india import crude oil?
Yes, India imports the large majority of the crude oil it consumes, relying heavily on suppliers in the Middle East as well as Russia and the United States.
What is india's oil import bill?
India's oil import bill has risen sharply this year, up 60% year over year in the April to June quarter and 41% higher in July compared with a year earlier, driven by higher crude prices, freight, and insurance costs.
How much crude does india import?
India imports crude from a mix of sources including Saudi Arabia, Russia, and the United States, with volumes fluctuating quarter to quarter based on price and availability.
How crude oil is imported to india?
Crude reaches India mainly by tanker, including very large crude carriers from the Persian Gulf and Suezmax vessels from ports such as Russia's Ust Luga, with freight and war risk insurance added to the delivered cost.
How much crude oil does india import?
Exact volumes vary by month, but India's own data shows import volumes were slightly lower in the April to June quarter even as the total bill rose sharply because of higher per barrel costs.
James Stephens
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