India’s BPCL to Cut Russian Oil Imports Due to Higher Prices

BPCL is changing its crude mix because Russian oil has become less competitive. The Indian state-owned refiner says November cargoes from Russia will cost more to bring in, while Middle Eastern grades offer better commercial value. This matters because refiners choose supplies based on their total delivered cost, not just the crude’s headline price.

The clearest example is BPCL’s November plan. Russian crude made up 37% of its supplies from July to September, but purchases for November will be “significantly reduced.” The company’s finance chief said higher shipping costs are the main reason. Russian crude premiums for December cargoes have fallen to $1-$2 per barrel, but they were as high as $13 for this month’s cargoes.

BPCL’s decision reflects a wider Indian trend. Middle Eastern imports rose to 2.8 million barrels per day in September, while Russian imports fell to 1.8 million. Russian purchases may rise toward year-end if pricing and freight conditions improve.

Russian crude oil means unrefined petroleum produced in Russia. The article does not provide a technical definition, but it shows why Indian refiners consider it: Russia is a major supplier, and its cargoes can be commercially attractive when their total cost is competitive. Refiners buy crude as the raw material for making fuels and other petroleum products.

BPCL relied heavily on Russian supply, which represented 37% of its crude purchases during the July-to-September quarter. That share shows Russian oil had an important place in the company’s sourcing strategy. However, a crude cargo’s value depends on more than its origin. Freight, premiums, regional prices, and availability all affect the final decision.

Now, Russian barrels are less appealing for November because shipping costs are higher. Middle Eastern grades have become more attractive, helped by increased availability and shorter voyages to India. BPCL may still buy more Russian crude toward the end of the year if market conditions become favorable.

Russian crude accounted for 37% of BPCL’s crude supplies during the quarter running from July through September. In simple terms, more than one-third of the crude BPCL processed or sourced during that period came from Russia. This is the clearest measure in the article of BPCL’s reliance on Russian oil.

The figure comes from Vetsa Ramakrishna Gupta, BPCL’s head of finance, during a discussion of the refiner’s quarterly earnings. It provides context for the company’s later decision to reduce Russian purchases in November. A smaller November buying plan does not mean Russian crude has become irrelevant; it means its share may decline from a previously important level.

The change follows higher shipping costs and less favorable economics. Middle Eastern crude is currently more attractive, partly because supplies have increased and voyages to India are shorter. BPCL could increase Russian purchases again toward the end of the year if costs and prices improve.

Shipping costs and oil premiums change the final price a refiner pays for crude. A distant cargo may look attractive at the source, but a costly voyage can erase that advantage. A premium also raises the price above a regional benchmark. BPCL therefore compares the complete delivered cost of Russian and Middle Eastern barrels.

The article gives a sharp example. Russian crude premiums reached as high as $13 per barrel for this month’s cargoes, although they fell to $1-$2 for December cargoes. Even with the lower premium, BPCL says higher shipping costs make Russian purchases less attractive for November. Middle Eastern grades now offer better commercial terms.

This choice can change as markets move. More Middle Eastern oil is available, and voyages from the Gulf of Oman to India are shorter. BPCL will reduce Russian purchases in November, but it may buy more Russian crude near year-end if freight costs, premiums, or competing supply conditions become more favorable.

Middle Eastern oil has become more attractive because Indian refiners can obtain more of it at competitive delivered prices. The article points to two main advantages: increased availability and shorter voyages from the Gulf of Oman to India. Shorter journeys generally reduce freight exposure and can make supply planning easier.

India’s September imports show the shift. Middle Eastern crude imports jumped 32% from August to 2.8 million barrels per day, reaching their highest level since February. At the same time, Russian imports fell 14% from August to 1.8 million barrels per day. These figures show that Middle Eastern supply was available when Indian refiners wanted alternatives.

BPCL is responding to that market balance. Its finance chief said Middle Eastern grades are currently more commercially attractive, so November Russian purchases will be significantly lower. Indian refiners are likely to keep preferring Middle Eastern oil when available, although BPCL may raise Russian purchases later in the year.

China’s stronger demand changed the competition for Russian crude. The article says China, deprived of Iranian oil, turned to Russian barrels. Because China and India sought the same supply, Indian buyers faced more competition. That pressure helped drive Russian crude prices higher relative to alternatives.

The effect appeared in India’s import figures. Russian crude imports fell 14% from August to 1.8 million barrels per day in September. Russia remained India’s largest single supplier, but its share of India’s total oil imports dropped from 46.6% in August to 33.5% in September. The shift happened as Middle Eastern supplies rebounded.

China’s demand therefore affected both volume and price. Indian refiners had fewer Russian barrels available at favorable terms, while Middle Eastern cargoes became more attractive. BPCL is cutting November Russian purchases, although Russian buying could rise later if competition, premiums, and freight costs ease.

Crude oil refining is the industrial process of separating and converting unprocessed petroleum into useful products such as fuels. The article does not explain the technical process, but BPCL’s sourcing decisions show the business challenge around it. A refinery needs dependable crude at a cost that supports profitable operations.

Refiners may combine crude from different regions because supply conditions change. BPCL sourced 37% of its crude from Russia during July to September, yet it plans to cut Russian purchases in November. Middle Eastern grades are now more attractive because their availability has increased, their voyages to India are shorter, and Russian freight costs are higher.

Using multiple sources gives refiners flexibility. India imported 2.8 million barrels per day from the Middle East in September, while Russian imports fell to 1.8 million. BPCL may still increase Russian purchases toward year-end. The best mix depends on delivered prices, premiums, freight, and available supply.