India Refiner to Reduce Middle East Term Oil Purchases

Indian Oil Corporation (IOC), India’s largest state-owned refiner, plans to slightly reduce the volumes of Middle East crude oil it procures under annual term deals for the 2027/2028 fiscal year starting next March, according to OilPrice. The decision comes amid growing supply uncertainty from the region and persistent disruptions in key shipping lanes.

Sourcing Shifts and Rising Costs

According to a source cited by OilPrice, IOC initially planned to procure 47% of its crude oil from the Middle East for the upcoming fiscal year, but will now trim that share. Indian refiners have historically relied on Middle Eastern supply due to short travel times and heavy, high-sulfur crude grades suited for domestic refinery specifications.

However, ongoing conflicts and vessel attacks in the Strait of Hormuz have driven up war-risk premiums and freight costs. In response, Indian refiners have suspended certain term purchases and turned to the spot market, securing additional crude volumes from South America, including Brazil, Venezuela, and Ecuador.

Import Bill Expansion

Despite efforts to diversify sourcing, international pricing pressures have impacted India's national import expenditures. India paid $15.4 billion to import crude oil in September, representing a 46% increase compared to the $10.5 billion import bill recorded in the same period last year.

For the April to September period, India's cumulative crude oil import bill surged by 46.3% to $90.6 billion, up from $61.9 billion previously. Import volumes have remained flat or lower than year-ago levels, with the expansion driven entirely by higher international crude prices.

Key facts

• Indian Oil Corporation will reduce Middle East crude term purchases for the 2027/2028 fiscal year.
• IOC initially planned to source 47% of its crude from the Middle East before revising the target.
• India's September crude import bill reached $15.4 billion, up 46% year-over-year.
• The April to September import bill rose 46.3% to $90.6 billion amid higher global oil prices.