India’s BPCL to Cut Russian Oil Imports Due to Costs

Bharat Petroleum Corporation Limited (BPCL), one of India's major state-owned refiners, plans to reduce its crude oil purchases from Russia in November, according to OilPrice. The decision follows rising freight costs and premiums for Russian crude, which have undermined the financial attractiveness of Moscow’s oil compared to Middle Eastern alternatives.

Discussing the refiner’s quarterly earnings with analysts on Monday, BPCL’s head of finance, Vetsa Ramakrishna Gupta, stated that Middle Eastern grades are currently more commercially viable for the company. Russian crude oil accounted for 37% of BPCL’s supplies during the July to September quarter. However, purchases of Russian cargoes for November will be significantly reduced due to elevated shipping expenses.

Market Shifts and Middle Eastern Supply

BPCL’s sourcing shift mirrors a broader trend among Indian refiners facing higher relative costs for Russian crude compared to Middle Eastern cargoes. Availability of Middle Eastern oil has increased due to rising flows through the Strait of Hormuz. India's crude imports from the Middle East rebounded to 2.8 million barrels per day (bpd) in September, marking a 32% increase from August and reaching the highest level since February.

At the same time, increased competition from China—deprived of Iranian oil supplies—has driven up Russian oil prices and diverted volumes. Russia remained India's single largest crude supplier in September, but imports fell by 14% from August to 1.8 million bpd, reducing Russia's share of India's total oil imports from 46.6% to 33.5%.

Premium Reductions and Outlook

Despite the reduction planned for November, purchases of Russian crude may increase toward the end of the year. Gupta noted that the premium for Russian crude has dropped to $1 to $2 per barrel over regional benchmarks for December cargoes, down from as high as $13 per barrel for current monthly cargoes.

Key facts

• BPCL will reduce Russian oil imports in November due to high freight costs and premiums.
• Russian crude accounted for 37% of BPCL's supplies between July and September.
• India's crude imports from the Middle East rose to 2.8 million bpd in September, up 32% from August.
• India's imports of Russian oil fell 14% in September from August to 1.8 million bpd.
• The premium for Russian crude dropped to $1–$2 per barrel for December cargoes from up to $13 per barrel.