Bharat Petroleum ramps up spot oil purchases amid Iran‑related supply

Bharat Petroleum Corp (BPCL) said its spot crude purchases have risen sharply this week as Gulf suppliers invoke force‑majeure following the Iran‑Israel conflict, forcing the refiner to keep its three plants running at about 115% of capacity【1】.

Daily import review and spot strategy

BPCL is reviewing its crude import plan “almost daily” and has shifted more of its 2026/27 requirement to the spot market after Gulf producers declared force‑majeure, a move the chairman described as necessary to keep refineries operating at 115% capacity【1】. The company originally intended to secure about 55% of its crude through annual contracts, mainly from the Middle East, with the balance sourced on the spot market【1】.

Pricing pressure and revenue impact

The refiner now sources 40‑45% of its crude from Russia, buying largely on the spot market after U.S. sanctions waivers, but the discount on Russian oil has narrowed to $5‑6 per barrel versus Brent, half the $10‑12 level earlier this year【1】. Despite the recent hikes in retail petrol and diesel prices—India’s third‑largest oil consumer raised fuel prices twice in a week—BPCL continues to record a revenue loss of 25‑30 rupees per litre on diesel and 10‑14 rupees per litre on petrol【1】.

Outlook for contracted supplies

BPCL expects its spot buying to ease if Saudi Arabian contracted volumes improve after the restoration of the kingdom’s east‑west pipeline capacity, but the current commitment from Saudi Arabia remains “small”【1】. The company is also scouting new annual supply deals for the next year, favouring nearby producers over distant sources such as Venezuela or Canada, and retains an optional annual crude purchase arrangement with Brazil【1】.

What to watch

• Progress on Saudi Arabia’s pipeline capacity and any increase in contracted volumes.
• Updates on Russian crude discount levels and U.S. sanctions waiver extensions.
• Indian fuel price adjustments and any further retail price hikes.

BPCL’s shift to spot buying underscores the fragility of Gulf supply routes amid geopolitical tension, while tighter margins on Russian crude and ongoing diesel losses highlight the cost pressures facing India’s state‑run refiners. The next few weeks will reveal whether contracted supplies can stabilise the market or if spot purchases will remain a dominant strategy.