BPCL to cut Russian crude purchases in November on high freight costs
Indian state refiner Bharat Petroleum Corporation Limited (BPCL) says it will buy less Russian crude next month as elevated shipping costs make Middle Eastern grades more attractive, a shift relevant for global oil flows.
BPCL finance head Vetsa Ramakrishna Gupta told analysts on an earnings call that Russian oil made up 37% of the refiner’s crude supply between July and September. He said November purchases of Russian cargoes would be “significantly reduced” because of higher freight costs, even as the discount on Russian barrels has narrowed sharply.
Gupta noted the premium on Russian crude versus regional benchmarks has fallen to $1-$2 a barrel for December cargoes, down from as much as $13 a barrel for current shipments. He added that Russian volumes could pick back up toward year-end.
BPCL’s move mirrors a broader pattern across India, where refiners have been leaning more heavily on Middle Eastern supply as flows through the Strait of Hormuz have increased. Vessel-tracking data compiled by Reuters showed India’s Middle East crude imports rose 32% in September from August to 2.8 million barrels per day, the highest since February.
Russia stayed India’s top single supplier in September but volumes fell 14% month-on-month to 1.8 million bpd, with its share of India’s import mix dropping to 33.5% from 46.6% in August. Competition for Russian barrels has intensified after China, cut off from Iranian oil, redirected demand toward Russian supply, pushing up prices. A source at an Indian refinery told Reuters that refiners are likely to keep favoring Middle Eastern oil when available, citing both cost and shorter shipping routes from the Gulf of Oman.
Why it matters: Shifts in India’s crude sourcing between Russian and Middle Eastern barrels affect global oil price spreads and shipping demand, with knock-on effects for Brent crude and WTI crude benchmarks as buyers reallocate volumes based on freight costs and discounts.
Source: OilPrice.com