$BPCL

Bharat Petroleum Corporation Limited is revising its crude import strategy almost every day and increasing spot purchases after the U.S.-Israel conflict with Iran disrupted oil supplies from the Middle East. India, the world’s third-largest importer and consumer of crude oil, has been affected by rising prices and supply bottlenecks following the closure of the Strait of Hormuz. In response, the country has increased petrol and diesel prices twice within a week. BPCL had originally planned to meet around 55% of its crude oil requirements for 2026-27 through long-term contracts, primarily with Middle Eastern suppliers, while sourcing the remaining volumes from the spot market. However, force majeure declarations by several Gulf producers have forced the company to rely more heavily on spot purchases to maintain refinery operations at 115% capacity. The state-run refiner operates three refineries in India with a combined processing capacity of 706,000 barrels per day. Around 40% to 45% of BPCL’s crude requirements are fulfilled through Russian oil imports, mostly bought on the spot market after U.S. sanctions waivers were granted, though the discounts on Russian crude have narrowed significantly. Discounts on Russian oil have declined to about $5-$6 per barrel below dated Brent on a delivered basis, compared with earlier discounts of $10-$12 per barrel. Despite recent increases in fuel prices, BPCL is still facing losses of 25-30 rupees per litre on diesel and 10-14 rupees per litre on petrol sales. The company expects its dependence on spot crude purchases to reduce if contracted supplies from Saudi Arabia improve following the restoration of capacity on the Kingdom’s east-west pipeline.