BPCL scouts for new crude sources as Russian supplies, Hormuz risks cloud outlook

Bharat Petroleum Corporation Ltd (BPCL) is exploring alternative sources of crude oil as uncertainty over Russian supplies and risks surrounding the Strait of Hormuz raise concerns over energy flows, Chairman and Managing Director Sanjay Khanna said on Thursday. The state-owned refiner is looking to diversify its crude basket and strengthen supply security as geopolitical developments threaten to disrupt some of the world's most important oil trade routes.

Khanna said BPCL continuously evaluates crude from different regions on the basis of availability, refinery suitability and commercial considerations. The company’s strategy is aimed at maintaining adequate flexibility to respond to disruptions or changes in global oil flows. Russian crude has become an important component of India's oil imports in recent years, with refiners taking advantage of discounted barrels following Western sanctions imposed after the Ukraine conflict. Any disruption to those supplies could force refiners to increase purchases from other producers.

At the same time, uncertainty surrounding the Strait of Hormuz has added another layer of risk. The narrow waterway is a critical route for global energy shipments, particularly crude and petroleum products originating in West Asia.

Diversifying crude basket

BPCL is examining additional sourcing opportunities to reduce dependence on any particular geography and ensure that its refineries continue to receive adequate crude even during periods of heightened geopolitical uncertainty.

India imports the overwhelming majority of the crude oil it consumes, leaving domestic refiners exposed to global price swings, shipping disruptions and geopolitical developments.

Diversification gives refiners greater flexibility to shift purchases between suppliers when prices or supply conditions change. However, alternative barrels must also meet technical specifications and remain commercially viable after freight and other costs are considered.

The company can source crude from multiple regions, including West Asia, Africa, the Americas and other producing countries, allowing it to adjust procurement depending on market conditions.

BPCL’s approach comes as Indian refiners closely track developments affecting Russian exports as well as shipping conditions across key maritime routes.

Hormuz remains key risk

The Strait of Hormuz remains particularly important for India because a substantial share of the country's crude oil and liquefied natural gas supplies originates in the Gulf.

Any prolonged disruption to shipping through the waterway could tighten global supplies, push up freight and insurance costs and exert upward pressure on international crude prices.

For refiners, such volatility can affect procurement costs and margins, while sustained increases in global oil prices can have wider implications for India's inflation, trade deficit and currency.

BPCL is therefore seeking to maintain a broad range of procurement options rather than relying excessively on individual suppliers or routes.

Energy security in focus

India's refiners have increasingly adopted flexible sourcing strategies as global oil markets have been reshaped by sanctions, conflicts and changing trade patterns.

Russian crude provided Indian refiners with an economically attractive source of supply in recent years, but geopolitical uncertainty has reinforced the importance of maintaining access to other producing regions.

BPCL's search for additional crude sources reflects that broader shift, with energy security and supply flexibility becoming increasingly important alongside price considerations.

The company is expected to continue assessing global crude opportunities as market conditions evolve, balancing cost advantages against supply reliability and the operational requirements of its refineries.