Indian state-owned refiners are booking spot crude cargoes for delivery as far ahead as November, far earlier than their usual one-to-two-month window. The rush follows a drop in Russian supply after Ukrainian strikes on Russian energy infrastructure and a continued standoff over the Strait of Hormuz.
Indian Oil Corp. and Hindustan Petroleum Corp. have already secured supplies through October and are now seeking cargoes for November, according to people familiar with the matter. These companies typically buy spot supplies just a month or two in advance.
Russian flows drop to a multi-month low
The buying spree reflects mounting concern over Russian supply, which has plunged to its lowest level since May after a wave of Ukrainian attacks on Russia's energy and port infrastructure. Russia has become India's biggest crude supplier in recent years, accounting for about half of purchases by state-run refiners.
Because Russian crude originates far away, sanctions have left a pool of Russian barrels available near India at short notice.
Hormuz standoff adds a second squeeze
Middle Eastern oil exports remain well below normal as talks between the United States and Iran stay deadlocked, leaving a full reopening of the Strait of Hormuz uncertain. Hardening positions in Washington and Tehran have dimmed hopes for a breakthrough, and Iran's attacks on two UAE ships on Friday may cloud prospects further.
Refiners are working around the bottleneck. HPCL bought about 4 million Middle Eastern barrels for October delivery that don't require passage through Hormuz, while Mangalore Refinery & Petrochemicals booked West African oil arriving the same month. Indian Oil is also seeking October supplies, and the companies are preparing more tenders in the coming weeks. Some November volumes have already been ordered. Spokespeople for Indian Oil, HPCL, MRPL and Bharat Petroleum Corp. didn't immediately respond to requests for comment.
Sanctions threat and rising demand compound the timing
The buying spree is also being driven by the threat of US sanctions on buyers of Russian oil and gas, including India and China. The US Senate last week passed legislation authorizing steep tariffs on major purchasers of Moscow's energy, though the measures have yet to take effect. India has said the bill is the US's internal matter.
State refiners meet about half their crude needs through term contracts and rarely commit spot orders more than two months out, given their proximity to producers in the Middle East and Africa. The new supply headwinds are landing just as India heads into its stronger demand season, with festivals starting in September, and as refining expansions add more than 500,000 barrels of daily processing capacity this year.
Source: Rigzone
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