Companies including Indian Oil Corp., Bharat Petroleum Corp. and Hindustan Petroleum Corp. plan to skip spot purchases of the crude in the upcoming buying cycle, until there’s clear government guidance, said the people, who asked not to be identified as they aren’t authorized to speak publicly. On Thursday, IOC bought five million barrels of oil from the US, Brazil and Libya, the latest in a string of purchases for relatively quick delivery.
The global oil market has zeroed in on India’s crude purchasing after President Donald Trump doubled the levy on all Indian exports to the US as a direct punishment for the country’s refiners taking Russian crude. The escalation — which hasn’t yet been matched by similar action against China, another major buyer — is meant to put pressure on Moscow to end the war in Ukraine.
The tension has swung futures this week as traders assess the odds of disruption to flows, as well as Moscow’s ability to find alternative buyers should Indian refiners opt to take fewer barrels. Brent was little changed near $67 a barrel on Thursday, following a five-day drop.
Officially, New Delhi hasn’t given any direction to refiners to stop buying Moscow’s crude, with Prime Minister Narendra Modi’s government pushing back against Trump’s tariffs. Bloomberg earlier reported that refiners had been asked to draw up plans for buying non-Russian crude.
An oil ministry spokesman didn’t immediately reply to an email seeking comment. Separately, IOC, BPCL and HPCL didn’t reply to messages from Bloomberg seeking comment.Beyond term contracts, oil producers and refiners typically deal with purchases in short-run cycles, with cargoes booked about one-and-a-half to two months ahead of loading. That planned-ahead pattern allows users to ensure they have enough on hand to meet their requirements.The pause will affect buying of Russia’s Urals cargoes for October-loading, they added.
While overall purchases of October-loading Urals by India’s refiners are unlikely to drop to zero, a dip could prompt a rush for other grades, with US, Middle Eastern and African cargoes as alternatives, said traders, who buy and sell across the region. Discussions for October cargoes have not yet started, though traders foresee deeper Russian discounts and more offers to China, which doesn’t typically take much of the variety.
In late-July, purchases of September-loading Urals concluded with India taking fewer barrels due to pricey offers. Since then, state-owned refiners have issued a slew of tenders, soaking up spot cargoes from other regions. Private processors Reliance Industries Ltd. and Nayara Energy Ltd., meanwhile, have been quiet, with the latter grappling with a steep drop in run rates following sanctions imposed by the…
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