On May 19, Sanjay Konar, Chairman of Indian state-run refiner Bharat Petroleum Corporation Ltd (BPCL), stated that due to supply disruptions in the Middle East caused by the US-Israel-Iran conflict and the closure of the Strait of Hormuz, the company is urgently adjusting its crude import strategy and significantly increasing spot purchases. As the world's third-largest crude importer and consumer, India has recently been impacted by rising international oil prices and supply chain disruptions, having raised retail prices for gasoline and diesel twice within a single week. Konar pointed out that BPCL originally planned to procure about 55% of its crude needs through annual contracts (primarily from the Middle East) for the 2026-2027 fiscal year, with the remainder supplemented via the spot market. However, as some Gulf suppliers declared force majeure, the company was forced to turn to the spot market to ensure its three refineries, with a combined capacity of 706,000 barrels per day, maintain operations at 115% of capacity. He emphasized that recent geopolitical uncertainty is the direct cause of the surge in spot purchases. Regarding alternative crude sources, Konar revealed that Russian crude currently accounts for 40% to 45% of BPCL's total demand, primarily purchased through the spot market after Washington granted sanctions waivers. However, BPCL's Chief Financial Officer, V. Ramakrishna Gupta, added that the price advantage of Russian oil is narrowing, with the premium for delivered Russian crude over dated Brent having decreased from an early range of $10 to $12 per barrel to $5 to $6 per barrel. He also noted that despite domestic fuel price increases, BPCL's retail business still faces severe cost pressures, with losses of 25 to 30 rupees (approximately 26 to 31 US cents) per liter for diesel and 10 to 14 rupees per liter for gasoline. Addressing future supply chain planning and risk hedging, Gupta stated that if Saudi Arabia restores and increases contracted supply through its east-west pipeline, pressure on BPCL's spot purchases could ease, but currently, Saudi Arabia can only offer minimal commitments for pipeline supply. To ensure energy supply security, BPCL is actively evaluating the possibility of signing supply agreements with new producers for the next fiscal year. The company prioritizes suppliers with flexible delivery terms and closer geographical proximity and has already established an optional annual crude purchase arrangement with Brazil. Furthermore, benefiting from sustained stable domestic fuel demand, BPCL's latest financial results, released the same day, showed that its fourth-quarter pre-tax profit (excluding exceptional items) increased by 42.6% year-on-year to 86.07 billion rupees (approximately $892 million).
Comments