Asian Premium

  • Asian Premium is extra charge being collected by OPEC countries from Asian countries when selling oil in comparison to western countries.
  • For example, production cost of one barrel of crude oil is Rs. 100 in OPEC countries. These countries want to make profit of Rs. 100 so they ideally should sell one barrel for Rs. 200.
  • But under Asian Premium pricing mechanism, OPEC countries gives discriminatory treatment to Asian countries (though being largest importer of OPEC produced oil) by charging them Rs. 220 per barrel and on other side giving discount to western countries by selling them at Rs.180 or below one 180 per barrel.
  • The discriminatory Asian Premium is mainly used by OPEC countries to subsidised western buyers at cost of Asian buyers
  • Why in news? India is coordinating with China and other Asian countries to raise voice against¬†Asian premium¬†charged by Organisation of the Petroleum Exporting Countries (OPEC).

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