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Bharat Petroleum Chairman Sanjay Khanna said force majeure declarations by some Gulf suppliers have pushed the refiner to increase spot buying.
Bharat Petroleum (File Image)
Bharat Petroleum Corporation’s chairman, Sanjay Khanna, on Tuesday said the refiner is reviewing its crude import strategy on an almost daily basis and ramping up spot purchases as the US war with Iran disrupted global energy supplies.
Khanna told Reuters that BPCL had planned to source about 55% of its crude requirement for 2026-27 through annual contracts, particularly from producers in West Asia, while the rest 45% would come through spot markets.
However, force majeure declarations by some Gulf suppliers have pushed BPCL to increase spot buying to keep refineries running at 115% capacity. “Definitely, our spot volume has gone up considerably in recent times because of all the uncertainty,” Khanna said.
This came while India is grappling with the economic fallout of the West Asia conflict, forcing the government to raise petrol and diesel prices twice in recent days. In Delhi, petrol prices increased by 87 paise to Rs 98.64 per litre, while diesel prices rose by 91 paise to Rs 91.58 per litre.
International crude oil prices surged following escalating tensions in West Asia, particularly the ongoing conflict involving the US, Israel and Iran. Brent crude prices crossed $100 per barrel as supply concerns intensified.
Bharat Petroleum’s Losses
Bharat Petroleum operates three refineries in India with a combined crude processing capacity of 706,000 barrels per day. Following US sanctions waivers, the company has been sourcing around 40-45% of its crude oil requirements from Russia.
However, discounts for Russian oil purchases have fallen to $5 to $6 per barrel on a delivered basis from $10 to $12 earlier, according to finance director Vetsa Ramakrishna Gupta. Despite recent fuel price hikes, BPCL continues to incur a revenue loss of Rs 25 to 30 (26 to 31 US cents) per litre on diesel and Rs 10 to 14 per litre on petrol, he said.
Bharat Petroleum is expecting spot purchases to ease if Saudi Arabia contracted supplies improve after the restoration of its east-west pipeline capacity, although Riyadh is offering “a small commitment” for supplies.
BPCL is also evaluating annual supply deals with new producers for next year if they offer flexible delivery terms and competitive pricing, although the company prefers sourcing from nearby regions over distant suppliers such as Venezuela and Canada.
(with inputs from Reuters)
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