Indian Oil Corporation (IOC) plans to buy less Middle East crude under annual deals in 2027-28, Reuters reports, citing a source. The cut to Indian Oil Middle East crude volumes will be “slight”. Even so, it marks a shift for India’s largest refiner.
Why Indian Oil is cutting Middle East crude
For the year to March 2027, IOC had planned to source about 47% of its crude imports from Gulf producers under annual deals. These are free-on-board contracts, so the buyer pays the freight. However, the Iran war is now in its eighth month. As a result, attacks near the Strait of Hormuz have cut tanker availability and pushed freight rates close to records.
Traditionally, Indian refiners took more than half their crude from the region. Instead, many Asian buyers have suspended some term purchases and turned to the spot market. Some producers now offer delivered cargoes and absorb part of the freight.
Spot, Iraq and Russia
Meanwhile, IOC and other Indian refiners have bought Iraqi crude at a discount to Dubai, the source said. Russian imports rose to fill the gap earlier. However, they could ease if Hormuz flows improve and Gulf producers offer better terms.
Shipping costs are also hurting IOC’s own plans. In July it sought stakes in at least two very large gas carriers. But it has paused the award, because a 10-year-old vessel now costs about $150mn, almost double.
The move echoes a wider fight over 2027 supply terms. Read our report on Aramco’s dispute with Asian refiners.
