India's Petrochemical Company (Bharat Petroleum Corporation Limited - BPCL), one of the largest state-owned refineries in India, has decided to reduce its crude oil purchases from Russia in November. The reasons for this decision include rising transportation costs and high premiums for Russian crude oil, which have made Moscow's oil less attractive compared to Middle Eastern oil offers.
Reduction in Russian Oil Purchases
According to Vitsa Ramakrishna Gupta, the CFO of BPCL, the company will purchase less Russian crude oil in November. He stated to analysts on the sidelines of the company's quarterly earnings report that Middle Eastern grades are now more commercially viable for the company. In the quarter ending September, Russian crude accounted for 37% of BPCL's oil supply. However, due to high transportation costs, Russian oil purchases will significantly decrease in November.
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Overall Oil Import Trends in India
Meanwhile, it seems that Russian crude oil purchases may increase by the end of the year. The premium for Russian crude for December shipments has decreased to $1 to $2 per barrel compared to regional benchmarks, while this figure was $13 per barrel for current shipments. BPCL's decision aligns with the recent trend of decreasing Russian crude oil imports in India, especially due to higher costs compared to Middle Eastern oil shipments that have become more accessible with increased flows from the Strait of Hormuz.
In September, India's crude oil imports from the Middle East reached 2.8 million barrels per day, a 32% increase from August and the highest level since February. Although Russia remained the largest supplier of crude oil to India in September, Russian oil imports decreased by 14% from August to 1.8 million barrels per day. The share of Russian oil in India's oil imports dropped from 46.6% in August to 33.5% in September.
China, having been deprived of Iranian oil due to sanctions, has turned to Russian crude oil and is directly competing with India for Russian oil supplies, leading to increased prices. In the future, it seems that Indian refineries will continue to prefer to purchase larger volumes of Middle Eastern oil when available, especially due to pricing and shorter journeys from the Gulf of Oman to India.
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