(Aug 1): Indian Oil Corp bought a record share of its crude oil from the spot market in the April-June quarter after the US-Iran conflict upended supplies from the Middle East. The shift shows how geopolitical turmoil is forcing even the region’s biggest buyers to abandon long-established procurement strategies.

The New Delhi-based refiner sourced as much as 84% of its crude through spot purchases, finance director Anuj Jain said on Saturday during an analyst call. This also lifted Indian Oil’s reliance on Russian crude to as high as 54% of its imports during the quarter. 

Usually, the company secures about half its requirements under long-term contracts with mainly Gulf producers. 

Indian Oil imported about 1.4 million barrels of crude a day in the quarter, accounting for roughly 27% of the country’s overseas oil purchases, according to Kpler data. Despite the abrupt change in its supply mix, the company expects to return to its traditional procurement once shipping through regional choke-points normalises. That’s because Middle Eastern producers remain the closest and most reliable long-term suppliers, chairman Arvinder Singh Sahney said during a media briefing late on Friday.

The refiner’s crude demand is set to rise further after expansions at its Panipat, Barauni and Gujarat refineries add 347,000 barrels a day of processing capacity by December, Jain said.

Besides expanding refining capacity, Indian Oil is accelerating investments in petrochemicals and renewable energy as it prepares for slower long-term growth in transport fuel demand. The company is also considering joining the government’s plan to more than double India’s strategic oil reserves to 87 million barrels, Jain said.

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