India’s state-controlled Indian Oil Corp plans to slightly cut crude purchases from Middle Eastern producers under annual contracts in the 2027/28 financial year as supply risks and near-record tanker freight reshape its sourcing strategy, according to Reuters.
The refiner had planned to source about 47% of its crude imports from Middle Eastern producers under annual free-on-board contracts in the financial year ending March 2027.
Shipping economics have deteriorated sharply. By mid-October, the cost of moving crude from the Middle East Gulf to Asia on a large tanker had risen above $37 per barrel, more than five times the pre-conflict level, while VLCC charter rates on the route exceeded $1.3 million per day.
The disruption has pushed some Asian refiners towards spot and delivered cargoes, while some Middle Eastern producers have offered crude on a delivered basis and absorbed part of the higher freight cost. Indian Oil also bought 2 million barrels of Iraq’s Basrah Medium crude from Vitol for loading between October 22 and 31 at a discount of $32 per barrel to the Dubai benchmark on a free-on-board basis.
Indian refiners had increased Russian crude purchases to offset lower Middle Eastern availability. Those volumes could decline if Gulf supplies improve and regional producers use crude and freight discounts to protect sales.
Indian Oil has 70.25 million tonnes per year of refining capacity. Group capacity including Chennai Petroleum Corporation totals 80.75 million tonnes per year, equivalent to about 31% of India’s national refining capacity. Its crude oil, petroleum product and natural gas pipeline network exceeds 20,000 km.
