Indian Oil Corporation Plans to Cut Middle East Crude Term Contract Volumes for FY2027–2028

en.Wedoany.com Reported - On October 21, Indian Oil Corporation, India's largest state-owned refiner, planned to reduce the volume of Middle East crude oil procured through annual long-term contracts for fiscal year 2027–2028. The company had previously arranged to purchase about 47% of its crude oil imports from Middle East suppliers on a free-on-board (FOB) basis during the fiscal year ending March 2027. Affected by disruptions in Middle East crude supply, shipping risks in the Strait of Hormuz and rising transportation costs, the company is adjusting its long-term procurement arrangements for the next fiscal year, with the specific reduction volume not yet determined.

Indian refiners have long purchased crude oil from Middle East oil-producing countries such as Saudi Arabia, Iraq and the United Arab Emirates, with medium-heavy, high-sulfur crude suitable for India's existing refining units. The voyage from the Middle East to India is relatively short, and refineries typically secure feedstock supply through a combination of annual supply contracts and spot purchases. Recent attacks on ships in the Strait of Hormuz and rising war risk premiums have prompted some Indian refiners to suspend execution of some long-term procurement arrangements and increase spot market purchases.

Indian Oil Corporation is reassessing the FOB delivery arrangements in its long-term contracts. Some Middle East oil-producing countries have begun offering price discounts on crude sold to Asia and adopting delivered-at-place (DAP) terms to bear part of the shipping costs. Indian refiners are also increasing crude purchases from South American oil-producing countries such as Brazil, Venezuela and Ecuador to supplement part of the affected Middle East supply.

Ship tracking data released by India on October 22 showed that Middle East crude imports reached about 2.8 million barrels per day in September, accounting for 54% of total national crude imports and the highest level since February 2026; Russian crude imports during the same period fell about 14% month-on-month to 1.8 million barrels per day. The actual recovery in Middle East crude imports and Indian Oil Corporation's planned adjustment of long-term contract procurement for the next fiscal year are proceeding in parallel, involving different procurement cycles.