BPCL leads push to lock in long-term Middle East crude oil purchases

By Yongchang Chin and Rakesh Sharma

 

Indian state-owned refiner Bharat Petroleum Corp. is seeking to lock in long-term Middle East crude purchases, in the latest sign that the world’s third-largest oil importer is edging back toward traditional suppliers and away from a heavy reliance on cheap Russian cargoes.

 

BPCL, as the company is known, has issued tenders for three grades — Abu Dhabi’s Murban, Iraqi Basrah and Oman crude — for delivery from April to March 2027, according to traders familiar with the contracts. That’s on top of a purchase agreement signed last year with Iraq for 2026, and is above levels seen in recent years, they said, asking not to be named due to the sensitivity of the matter.

 

BPCL did not respond to a request for comment.

 

The oil market has kept a close eye on India’s buying activity over recent months, as US sanctions on major Russian producers including Lukoil PJSC and consistent pressure from the Trump administration force refiners to begin weaning themselves off Moscow’s discounted crude. In contrast to changes in spot purchases, which can be opportunistic, year-long agreements point to a longer-term commitment.

 

New Delhi officials have now been walking a geopolitical tightrope for months, balancing the country’s long-standing relationship with Russia with the reality of political and economic pressure from the US, which imposed punitive tariffs on Indian imports last year. A trade deal with Washington remains elusive.

 

In one indication of increased government attention, the oil ministry’s planning and analysis unit asked refiners last month to furnish details of their imports from Russia and US on a weekly basis. They cited directions from the Prime Minister’s office, according to people familiar with the matter. 

 

But major refiners are edging back to traditional suppliers. Reliance Industries Ltd. has been active in the Middle Eastern spot market, buying grades including Qatar Land and Al-Shaheen earlier this month, the traders said.

 

“We have had the situation when suddenly the sanctions came in, and we had to cut back,” Srinivas Tuttagunta, chief operating officer of Reliance’s refining and trading business, said on an earnings call last week. He added the company could approach national oil companies for alternative supply without disrupting the spot market.

 

Mangalore Refinery and Petrochemicals Ltd., meanwhile, is “committed to Middle East crude led by Saudi Aramco, so that gives us a very stable kind of sourcing, whatever may be the geopolitical conditions, and we would continue with that,” Devendra Kumar, its finance director, said in on an earnings call earlier this week. It buys about 40% of its crude from the Middle East.

 

State refiner Indian Oil Corp., the nation’s largest, had also been sourcing more crude from the Middle East, both in the spot market through tenders, as well as taking barrels from long-term sellers like Saudi Arabia. It issued a tender for Americas supply late last year.

 

India’s imports of Russian crude, which topped 2 million barrels per day at the peak, are expected to come in at 1.2 million to 1.4 million in January at most, little changed from December levels. The final number could be lower still, refinery executives said last week.