BPCL Continues to Monitor Oil Imports Amid Ongoing Tensions in Iran

India's Oil Import Disruptions Force Bharat Petroleum to Rethink Crude Strategy

India, the world's third-largest oil importer and consumer, is facing a severe disruption in crude oil supplies following the U.S.-Israeli conflict with Iran. The closure of the Strait of Hormuz has pushed crude prices up, prompting Bharat Petroleum Corp. (BPCL) to recalibrate its crude import strategy almost daily.

BPCL, a state-run refiner, had initially 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. However, force majeure declarations by some Gulf suppliers have forced the company to increase spot buying to keep refineries running at 115% capacity.

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The company operates three refineries in India with a capacity to process 706,000 barrels per day of oil. BPCL meets 40-45% of its crude needs with Russian oil bought largely in the spot market after Washington granted sanctions waivers. 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.

BPCL 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 giving only a "small commitment" for supplies through the pipeline. The company is also evaluating annual supply deals with new producers for next year if they offer flexible delivery terms and competitive pricing.

In a separate development, BPCL reported a 42.6% rise in fourth-quarter profit before exceptional items and tax to 86.07 billion rupees ($892 million), helped by steady fuel demand.