Indian Oil Corporation (IndianOil), the largest refiner in India, has recently acquired approximately 7 million barrels of crude oil from the United States, the Middle East, and Canada. This move is part of a strategy to compensate for the pause in Russian crude imports, which are currently on hold for state-owned refiners in India. Anonymous industry sources disclosed details of the purchases made in a spot tender last week.
Among the acquisitions, IndianOil secured 4.5 million barrels of U.S. West Texas Intermediate Midland, 2 million barrels of Abu Dhabi’s Das crude, and 500,000 barrels of Western Canadian Select (WCS) crude. The decision follows a series of developments influencing the global oil market and Indian refineries’ operations.
Shift in Strategy Amid Global Pressures
IndianOil, alongside other state-run refiners such as Bharat Petroleum Corporation Ltd (BPCL), Hindustan Petroleum Corporation Limited (HPCL), and Mangalore Refinery and Petrochemicals Limited (MRPL), has temporarily halted purchases of Russian crude oil. This decision awaits further government guidance regarding potential penalties linked to Russian oil imports. U.S. President Donald Trump has recently threatened secondary tariffs on entities buying Russian oil, escalating the urgency for Indian refiners to adjust their sourcing strategies.
Despite having regularly imported Russian oil on a delivered basis, the current geopolitical landscape has prompted Indian refiners to seek alternatives. With the narrowing discounts on Russian crude compared to other options, the refiners have turned their attention to the spot market for additional barrels from the Middle East and West Africa.
In recent weeks, the prices of Middle Eastern crude have surged, raising concerns about the reliability of Russian supplies favored by both China and India. The potential for disruptions in these supplies, should the U.S. follow through on its threats, has made crude from the U.S. more attractive. This shift indicates a significant change in procurement strategies as Indian refiners respond to market dynamics and geopolitical tensions.
Current Shipping Challenges and Industry Response
While Indian refiners navigate these changes, data compiled by Bloomberg indicates that several crude cargoes from Russia remain idle off the west coast of India. The situation highlights the immediate challenges faced by the industry as it grapples with both supply chain adjustments and the implications of international relations on oil imports.
As Indian refiners adjust their procurement strategies, the transition to non-Russian sources of crude oil marks a critical moment in the evolving landscape of global oil supply. The ability to adapt to these changes will be crucial for maintaining operational stability amidst fluctuating market conditions.
This situation underscores a broader trend in the oil market where geopolitical factors increasingly influence business decisions. Indian refiners, holding over 60% of the country’s refining capacity, are at a pivotal juncture, with their future procurement strategies likely shaping India’s oil landscape in the coming months.
