Indian refineries are rushing to lock in oil orders longer than usual in advance to cope with reduced Russian supply and uncertainty in the Strait of Hormuz, amid the risk of US sanctions.
On August 14, 2569, at 14.14:XNUMX a.m., Bloomberg News reported that India's state-owned oil refineries are rushing to secure crude oil in the spot market well in advance of previous orders amid concerns that global oil supply may face increased uncertainty. This includes Ukraine's attacks on Russia's energy infrastructure, as well as disruptions to the Strait of Hormuz, a vital global oil shipping route.
Sources familiar with the matter indicate that major Indian refineries, including Indian Oil Corporation and Hindustan Petroleum Corporation, have already secured some oil for deliveries up to October and are looking for oil for deliveries as far as November.
This move deviates from normal procurement patterns, as Indian state-owned refineries typically only purchase crude oil in the spot market 1-2 months in advance.
India's accelerated oil purchases, making it the world's third-largest oil importer, reflect growing concerns about supply security, particularly from Russia, which has become India's largest source of crude oil imports in recent years and accounts for roughly half of all oil purchases by state-owned refineries.
However, oil inventories from Russia have fallen to their lowest levels since May, following a series of attacks on Russia's energy infrastructure and ports, raising concerns about the continuity of oil exports.
Meanwhile, supply from the Middle East remains below normal levels amid stalled negotiations between the US and Iran, and the prospects for a full reopening of the Strait of Hormuz remain uncertain following increasingly aggressive stances from both Washington and Tehran, diminishing hopes of reaching an agreement.
The situation has become even more uncertain following reports that Iran attacked two UAE ships on Friday, which could further diminish the chances of progress in resolving the situation in the Strait of Hormuz.
Amid these risks, Hindustan Petroleum Corporation has purchased approximately 4 million barrels of crude oil from the Middle East for delivery in October, selecting sources that allow for transportation without passing through the Strait of Hormuz.
Mangalore Refinery and Petrochemicals has booked oil from West Africa for delivery in the same month, while Indian Oil, the country's largest refinery, is also securing additional oil for October.
Sources indicate that India's oil companies are preparing to tender for additional oil purchases in the coming weeks, after having already secured some supplies for October and placed some orders for November delivery.
Another factor accelerating the diversification of oil sources by Indian refineries is the risk of US sanctions on countries that purchase oil and gas from Russia, including India and China. This follows the US Senate's passage of a bill last week that would allow for high tariffs on major energy buyers from Russia, even though the measures have not yet come into effect.
Typically, Indian state-owned refineries supply about half of their oil through long-term contracts and do not need to purchase spot oil more than two months in advance, given India's proximity to major producers in the Middle East and Africa, and its relatively quick access to Russian oil in recent years.
However, supply risks arise as India enters its peak oil demand season, driven by festivals beginning in September. Simultaneously, refinery expansion this year, adding over 500,000 barrels per day to refining capacity, will further boost the country's crude oil demand.
This situation has forced Indian refineries to quickly lock in supplies in advance and diversify their import sources to mitigate risks from a potential Russia-Ukraine conflict, uncertainty in the Middle East, and the risk of US sanctions against Russia.
refer : bloomberg.com
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