Indian Oil Abandons Long-Term Contracts Amid Middle East Supply Disruptions

Indian Oil Corp has been forced to drastically alter its procurement strategy due to the recent US-Iran conflict, which disrupted supplies from the Middle East. The company, a major oil refiner in India, sourced as much as 84% of its crude oil from the spot market in the April-June quarter.

This shift is a significant departure from Indian Oil's usual practice of securing about half its requirements through long-term contracts with Gulf producers. Despite the change, the company still managed to import around 1.4 million barrels of crude per day during the quarter, accounting for roughly 27% of India's overseas oil purchases.

Indian Oil's chairman Arvinder Singh Sahney stated that the company will return to its traditional procurement strategy once shipping through regional choke-points normalizes. The refiner is also investing in expanding refining capacity and accelerating investments in petrochemicals and renewable energy, anticipating slower long-term growth in transport fuel demand.