NEW DELHI: The immediate ban on Russian oil and other energy imports by the US is going to create a supply crunch as Russia exports 4-5 million barrels of oil per day, leading to a surge in crude oil prices globally. The ban, however, is not going to directly impact Indian supplies as it imports only 2% oil from Russia, but the rising oil price is a big concern for India as it imports 85% of its oil demand.
The Indian import basket is a blend of crude predominated by supply from West Asia. “ONGC, Oil India, IOCL and BPCL have Russian exposure, which could be impacted with foreign operators exiting the country and dividend repatriation affected by financial sanctions. We estimate an impairment loss of up to Rs 28/share for ONGC and Rs 32/share for Oil India, while for IOCL and BPCL, it should be Rs 8 and Rs 20, respectively,” said a report by Emkay Global Financial Services.
An impairment loss is recognised when the recoverable price of an asset is less than the price recorded in the books of the company. “As of now, most European countries have not joined the ban. The US currently procures a very small portion of Russian crude oil exports. Unless more countries join the ban it would have a limited impact per se. However, crude prices have run up owing to many traders and refiners reducing purchases of Russian crude due to the threat of sanctions,” Prashant Vasisht, Vice President and Co-Head - Corporate Ratings, ICRA Limited said.
The price of crude oil in the international market has been on boil ever since Russia started military operations in Ukraine. The Brent Crude Future touched $139 per barrel on 7 February, the highest since 2008. But again it contracted at $124 per barrel on Wednesday. The US President Joe Biden announced a ban on Russian oil and other energy imports and Britain said it would phase out Russian oil imports by the end of 2022.
Crude price in international market
The price of crude oil in the global market has been on the boil ever since Russia started military operations in Ukraine. The Brent Crude Future touched $139 per barrel on 7 February, the highest since 2008. But again it contracted at $124 per barrel on Wednesday. The Indian import basket is a blend of crude predominated by supply from West Asia.