New Delhi, 26 October. India's state-owned Bharat Petroleum Corporation (BPCL) will buy much less Russian oil in November because higher freight costs have made Middle Eastern grades more economical, said the company's finance director Vetsa Ramakrishna Gupta on a call with analysts on quarterly results.
"We are getting the full volume, but there are challenges," Gupta said, adding that Russian cargoes for November were "significantly reduced" because of higher shipping costs. In July–September Russian crude made up about 37% of BPCL's supplies. The company did not say by how much purchases would fall and has not announced a complete halt; they may rise again towards the end of the year.
In September Indian refiners brought imports of Middle Eastern crude back to pre-war levels and cut purchases of Russian oil amid stiff competition with China: deprived of Iranian oil, China switched to Russian crude and drove up its price. BPCL also warned that refinery runs would fall, with some units at its Mumbai refinery shut for 30 days and units in Kochi for 30–40 days.
What it means: Freight costs and competition with China are eroding the price advantage of Russian oil for India, and Middle Eastern crude is returning to the Indian market.
Who benefits: Middle Eastern exporters regain a large buyer. Russian exporters will have to rely more on China.
Background: BPCL is one of India's largest state-owned refiners. On 26 October Brent traded at about 115.4 dollars a barrel. Kazakhstan's revenue also depends on world prices: Kazakh CPC Blend crude is sold at prices linked to Brent.
