Indian Oil Corp (IOC), India's leading refiner, has dramatically increased its crude oil purchases from the spot market. This surge in spot buying, from 50% to approximately 84% of its total oil volume, is a direct response to disruptions in Middle Eastern supplies, primarily caused by the U.S.-Iran war that began in late February. Anuj Jain, IOC's head of finance, stated that the situation is highly dynamic and the company continuously optimizes its crude sourcing. Indian refiners, including IOC, have shifted to spot purchases due to supply issues from the Strait of Hormuz and the Red Sea.
To compensate for the reduced Middle Eastern supply, IOC has intensified its procurement of oil from West African and Latin American producers. The company also heavily relies on spot purchases of Russian oil for its refineries. IOC, along with its subsidiary Chennai Petroleum Corp, controls about a third of India's 5.2 million barrels per day refining capacity. Looking ahead, IOC aims to process 1.7 million barrels per day of oil at its directly owned refineries by 2027/28, as it plans to expand the capacity of some units by the end of this year.
This shift by Indian refiners is part of a broader strategy to diversify crude sources away from the Middle East, a region that historically accounts for a large portion of India's imports. The conflict has highlighted India's energy vulnerability, leading to record crude oil import bills. For instance, India's crude oil import bill for Q1 FY27 reached an all-time high of nearly $50 billion. Other state-owned refiners like Bharat Petroleum Corporation Limited (BPCL) also saw their spot crude share rise significantly, with BPCL's spot purchases increasing to 69% in Q1 FY27 from 44% in the previous year. This indicates a widespread industry response to the geopolitical instability affecting traditional supply routes.
