Indian Oil plans smaller Gulf crude purchases under 2027/28 annual deals

what happened

Indian Oil Corp (IOC), the country's largest refiner, intends to buy slightly less crude from Gulf suppliers under annual contracts in the 2027/28 fiscal year, according to a source cited by Reuters. The source asked not to be named because the matter is sensitive.

Indian refiners have long drawn more than half of their yearly crude imports from the Middle East, mainly heavier, high-sulphur grades that are close by. IOC had earlier intended to take roughly 47% of its imports from regional producers through FOB annual deals for the fiscal year ending March 2027. The Iran war, now in its eighth month, has prompted Asian buyers to pause some contracts, while attacks on ships in the Strait of Hormuz pushed freight close to record levels.

Refiners have shifted to spot purchases, and IOC has recently bought Iraqi crude at a discount to Dubai. Russian imports, which India increased to fill the gap, may fall as flows through Hormuz recover. The company also paused an award for a stake in very large gas carriers, since the price of a 10-year-old vessel has almost doubled to about $150 million.

why it matters

For oil markets, the signal is that Asian demand for Middle Eastern grades could soften in the next fiscal year, while high freight and spot premiums keep shipping costs elevated. Traders track the spread to Dubai and the discounts on Iraqi cargoes as gauges of regional supply stress.

market impact

Dubai-linked crude: lower Indian demand for Gulf grades could weigh on regional premiums and freight rates

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