Bharat Petroleum Continues Daily Review of Oil Imports Amid Iran Conflict

India's Bharat Petroleum Corp. Recalibrates Crude Import Strategy Amid Middle East Disruptions

India's state-run refiner Bharat Petroleum Corp. is rapidly adapting its crude import strategy in response to the ongoing U.S.-Israeli conflict with Iran, which has severely disrupted Middle East supplies. The refiner's Chairman, Sanjay Khanna, stated that the company is now making almost daily adjustments to its import strategy and increasing spot purchases to meet its energy demands.

India, the world's third-largest oil importer and consumer, has been heavily impacted by rising crude prices and supply disruptions following the closure of the Strait of Hormuz. In response, the South Asian nation has raised its retail prices of petrol and diesel twice in a week. Bharat Petroleum Corp. had initially planned to source approximately 55% of its crude requirement for 2026/27 through annual contracts with Middle Eastern producers, with the remaining 45% to be sourced through spot markets.

However, due to force majeure declarations by some Gulf suppliers, Bharat has been forced to increase its spot buying to maintain refinery operations at a capacity of 115%. This shift in strategy has resulted in a significant increase in spot volume purchases.

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Bharat Petroleum Corp. operates three refineries in India, with a total capacity to process 706,000 barrels per day of oil. The state-run refiner meets 40-45% of its crude needs with Russian oil, which is largely sourced through the spot market following Washington's grant of sanctions waivers. Despite recent fuel price hikes, Bharat Petroleum Corp. continues to incur a revenue loss of 25-30 rupees (26-31 U.S. cents) per liter on diesel and 10-14 rupees per liter on petrol.

The company expects spot purchases to ease if Saudi Arabian contracted supplies improve after the restoration of the Kingdom's east-west pipeline capacity. However, Saudi Arabia is currently only providing a "small commitment" for supplies through the pipeline. Bharat Petroleum Corp. is also evaluating annual supply deals with new producers for next year, provided they offer flexible delivery terms and competitive pricing. The company prefers sourcing from nearby regions over distant suppliers such as Venezuela and Canada. Additionally, Bharat has an optional annual crude purchase arrangement with Brazil.