BPCL Eyes Iraqi Crude Amid Hormuz & Russian Oil Worries

Bharat Petroleum Corporation Ltd (BPCL) is actively exploring additional crude oil supplies from the Gulf region, including its first Iraqi crude cargo for the current financial year. This strategic move addresses ongoing disruptions in the Strait of Hormuz and growing concerns regarding Russian oil supplies, impacting India’s energy security.

The company is considering free-on-board (FOB) purchases from Gulf suppliers, contingent on vessel availability and commercial viability of shipping. Vetsa Ramakrishna Gupta, BPCL’s finance chief, confirmed a vessel has been secured for cargo transfer to Fujairah.

Key Sourcing Metrics

• BPCL typically requires approximately 2 million barrels of Iraqi crude monthly.
• Iraq has offered discounts for August-loading Basrah crude to incentivize buyers.
• BPCL might incur additional demurrage costs of 30 to 45 days if overall economics remain favorable.
• About a fifth of global oil and LNG supplies pass through the critical Strait of Hormuz.
• Russian volumes account for 35% to 45% of India’s crude needs.

Gupta indicated that such cargoes could be considered if insurance costs are manageable and shipowners accept the associated risks. The overarching condition remains favorable overall economics for BPCL.

Geopolitical Pressures and Outlook

BPCL’s crude sourcing plans are also influenced by proposed US measures targeting major buyers of Russian oil and gas. The company has already secured its crude requirements for September and is currently working on October supplies.

Sanjay Khanna, BPCL’s chairman, highlighted that losing access to Russian volumes would significantly complicate procurement, especially if pressure on the Strait of Hormuz persists. The current situation remains uncertain, making future crude supply predictions difficult for the company.