Bharat Petroleum Corp. (BPCL) is adjusting its crude oil procurement plans almost daily as conflict-linked disruptions in the Middle East affect longer-term supply arrangements. BPCL chairman Sanjay Khanna says the company is recalibrating import strategy following spillover from the U.S.-Israeli conflict involving Iran and the resulting disruption to flows through the Strait of Hormuz. India’s broader exposure includes higher crude prices and supply uncertainty, while fuel retail prices are raised by the government multiple times in a week. BPCL previously planned to secure about 55% of its 2026/27 crude needs through annual contracts, largely from Middle Eastern producers, with the remainder via spot markets. Force majeure declarations from some Gulf suppliers and tighter availability lead BPCL to increase spot buying to maintain refinery operations at elevated utilisation levels. BPCL runs three refineries with combined processing capacity of about 706,000 barrels per day and now relies more heavily on spot barrels. The company also continues to source a substantial share of crude from Russia, including spot purchases enabled by sanctions waivers, though reported discounts have narrowed. BPCL says it expects spot demand to ease if Saudi supply commitments improve, and it is evaluating flexible annual supply terms with additional producers for next year.
BPCL increases spot crude purchases as Iran conflict disrupts Middle East supply contracts
Bharat Petroleum Corp. (BPCL) is adjusting its crude oil procurement plans almost daily as conflict-linked disruptions in the Middle East affect longer-term supply arrangements. BPCL chairman Sanjay K...
- BPCL increases crude spot purchases as conflict-related disruptions disrupt Middle East term supplies.
- BPCL says uncertainty linked to the Iran-related conflict affects flows, including through the Strait of Hormuz.
- BPCL had planned about 55% of 2026/27 crude via annual contracts, but force majeure from some Gulf suppliers shifts more volume to spot.
- BPCL operates three refineries with total capacity of about 706,000 barrels per day and keeps utilisation at high levels amid the supply changes.
- BPCL continues buying Russian crude, relying on sanctions waivers and noting narrower discount levels versus earlier periods.
India's state-run refiner Bharat Petroleum Corp. is recalibrating its crude import strategy almost daily and ramping up spot purchases after the U.S.-Israeli conflict with Iran disrupted Middle East supplies, Chairman Sanjay Khanna said on Tuesday. India, the world's third-largest oil importer and consumer, has been hit by rising crude prices and supply disruptions following the closure of the Strait of Hormuz. The South Asian nation has raised the retail prices of petrol and diesel twice in a week. The refiner had planned to source about 55% of its crude requirement for 2026/27 through annual contracts, mainly from Middle Eastern producers, and the rest through spot markets. But force majeure declarations by some Gulf suppliers have pushed Bharat to increase spot buying to keep refineries running at 115% capacity, Khanna said. "Definitely, our spot volume has gone up considerably in recent times because of all the uncertainty." Bharat operates three refineries in India with a capacity to process 706,000 barrels per day of oil. The state-run refiner meets 40%-45% of its crude needs with Russian oil bought largely in the spot market after Washington granted sanctions waivers, Khanna said, although discounts have narrowed sharply. Discounts on Russian crude have fallen to $5 to $6 per barrel to dated Brent on a delivered basis from $10 to $12 earlier, finance director Vetsa Ramakrishna Gupta said. Despite recent fuel price hikes, BPCL continues to incur a revenue loss of 25 to 30 rupees (26 to 31 U.S. cents) per litre on diesel and 10 to 14 rupees per litre on petrol, Gupta said. BPCL expects spot purchases to ease if Saudi Arabian contracted supplies improve after the restoration of the Kingdom's east-west pipeline capacity. Saudi Arabia is currently giving only "a small commitment" for supplies through the pipeline, Gupta said. BPCL is also evaluating annual supply deals with new producers for next year if they offer flexible delivery terms and competitive pricing, although the company prefers sourcing from nearby regions over distant suppliers such as Venezuela and Canada. The refiner also has an optional annual crude purchase arrangement with Brazil.
3 months agoIndia’s Bharat Petroleum Corp. Ltd. has largely shifted to making spot crude purchases as the Iran war upends annual arrangements for Middle Eastern barrels, highlighting challenges for refiners to secure supplies.
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