International crude prices have climbed above $100 per barrel following disruptions around the Strait of Hormuz, a critical route that accounts for about 40% of India’s crude imports, after military strikes by the United States and Israel on Iran late last month.

Oil Minister Hardeep Singh Puri said the government had absorbed a significant fiscal burden to offset losses incurred by oil marketing companies, estimating under-recoveries of about 24 rupees per litre on petrol and 30 rupees per litre on diesel at current global prices.

Economist Madhavi Arora of Emkay Global estimated the annualised fiscal impact of the duty cuts at around 1.55 trillion rupees, noting that the measures would cover roughly 30% to 40% of annual losses faced by fuel retailers.India’s benchmark 10-year government bond yield rose 7 basis points to 6.95%, its highest level in 20 months, reflecting concerns over increased borrowing and fiscal strain

.Shares of state-run refiners, including Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited, rose more than 4% at the open before trimming gains later in the session.

Although India formally deregulated fuel pricing, state-owned oil marketing companies which dominate about 90% of the retail market often delay passing on higher crude costs to consumers during periods of volatility.

The latest measures highlight the government’s reliance on tax adjustments and export levies to manage domestic fuel prices and inflationary pressures during global energy shocks.

While some refiners have slowed new purchases, others are turning to alternative sources on the global spot market to maintain steady energy supplies.

Despite the temporary pause, India’s commitment to energy stability remains firm. State-run Indian Oil Corporation (IOC) has stated that it will continue to purchase Russian crude as long as transactions comply with international regulations.

“Russian crude is not sanctioned. It is the entities and shipping lines that are affected,” said Anuj Jain, Finance Director of Indian Oil.

He emphasized that IOC would continue sourcing oil through non-sanctioned entities and compliant shipping arrangements, ensuring uninterrupted operations while adhering to global norms.

India has become one of the largest importers of Russian oil since 2022, when Moscow began redirecting exports eastward following the Ukraine conflict.

According to the International Energy Agency, India imported about 1.9 million barrels per day of Russian crude during the first nine months of 2025 — nearly 40% of Russia’s total seaborne exports.

This shift has helped India secure competitively priced oil and maintain a diverse energy basket during volatile global market conditions.

In recent days, several refiners, including Indian Oil, Reliance Industries, and Mangalore Refinery and Petrochemicals Ltd (MRPL), have taken proactive steps to ensure continuity in operations.

Indian Oil has floated a new tender for compliant oil supplies, while Reliance has increased purchases from the spot market to make up for any potential shortfall.

MRPL has also issued a tender to buy between 1 million and 2 million barrels of crude to maintain its refining operations.

Similarly, Bharat Petroleum Corporation Ltd (BPCL) plans to issue a spot tender within the next week to secure December-loading cargoes.

According to industry sources, BPCL will continue to buy Russian oil only from non-sanctioned entities while exploring alternative sources for a portion of its supply.

The company typically purchases around 2 million metric tons of oil from spot markets each month, most of which is Russian. For November, BPCL is fully covered, and the company is now working to secure adequate volumes for December.

Officials have indicated that the most likely replacements for Russian crude in the short term are Iraq’s Basrah Heavy and Basrah Medium grades, as well as U.S. West Texas Intermediate (WTI) crude.

However, WTI currently costs about $3 to $3.50 per barrel more than competing grades, making price optimization a key focus for refiners.

While the European Union, the UK, and the United States have introduced successive rounds of sanctions targeting Russian energy companies such as Lukoil and Rosneft, Indian refiners are treading carefully to ensure compliance without compromising energy security.

The Indian government has maintained a balanced stance, reiterating that purchases will continue from sources not under direct sanctions.

Industry experts note that Indian refiners’ cautious strategy demonstrates prudence and adaptability in navigating a complex geopolitical and economic environment.

Refiners are closely coordinating with suppliers to ensure transactions remain within the boundaries of international law while securing the volumes needed to sustain industrial activity and fuel demand.

One refinery executive said his company had cancelled some previously booked cargoes linked to sanctioned entities but was exploring fresh deals with approved traders.

Another source confirmed that refiners are waiting for further guidance from both domestic authorities and global trading partners before finalizing additional Russian shipments.

Overall, India’s approach reflects a balanced energy strategy — one that prioritizes compliance, economic stability, and diversification.

While the recent sanctions have temporarily slowed procurement, Indian refiners are well-positioned to adjust through global sourcing and strategic planning.

As energy markets continue to shift, India’s refiners remain focused on ensuring uninterrupted supply chains and maintaining affordable fuel prices for domestic consumers.

The ongoing evaluation of new trade routes and partnerships underscores India’s growing role as a key player in shaping global oil dynamics, demonstrating both resilience and pragmatism in uncertain times.

The project marks a significant step in expanding the country’s refining capabilities while encouraging regional industrial growth.

The refinery will have a capacity of 180,000 to 240,000 barrels per day, backed by essential statutory approvals and 6,000 acres of land provided by the state government.

Construction and pre-project groundwork are already in progress, signaling a new era of investment in India’s southern energy corridor.

BPCL Chairman Sanjay Khanna, speaking at an industry event in Hyderabad, confirmed that the company is seeking additional strategic partners for the venture.

Oil India, traditionally known for its upstream operations, is diversifying into downstream sectors and is likely to take a 10% to 20% stake in the upcoming refinery.

This collaboration underscores India’s growing ambition to position itself as a global refining and petrochemical hub.

With energy demand steadily rising and consumption patterns evolving, such initiatives are crucial for meeting the country’s long-term energy security goals while reducing dependence on imported fuels.

The proposed petrochemical complex will feature an advanced 1.5-million-tonne ethylene cracker, serving as the backbone for downstream industries including plastics, packaging, and textiles.

It is expected to commence commercial operations by the fiscal year 2030, generating substantial employment opportunities and attracting investments across related industries.

India, currently the world’s third-largest oil importer and consumer, continues to rely heavily on fossil fuels to power its economic growth.

Projects like the BPCL-Oil India refinery reflect the nation’s strategic approach of expanding domestic production while simultaneously investing in cleaner, more efficient refining technologies.

Oil India is also accelerating its downstream expansion through its subsidiary, Numaligarh Refinery Limited (NRL), which is increasing its capacity in Assam to 180,000 barrels per day by March 2027.

This integrated approach across refineries is expected to strengthen supply chains and ensure consistent energy distribution across regions.

The Andhra Pradesh project will further complement national infrastructure plans, with BPCL and Oil India partnering on a 700-kilometer multi-product pipeline connecting Siliguri to Mughalsarai.

This pipeline will transport petrol, diesel, and jet fuel, enhancing the logistics network across India’s energy heartland. BPCL will hold a 50% stake in the project, while Oil India and NRL will share the remaining equity.

In addition, BPCL is expanding its focus on sustainability. The company has partnered with Fertilisers and Chemicals Travancore Ltd (FACT) to market organic fertilizers produced from its Kochi biogas plant.

This collaboration reflects BPCL’s commitment to circular economy practices and renewable energy integration within its business model.

BPCL, India’s second-largest state-run refiner, currently operates three major refineries with a combined capacity of 706,000 barrels per day. With this new project, the company aims to consolidate its position as a leading force in South Asia’s refining and petrochemical sector.

Experts believe the refinery and petrochemical complex in Andhra Pradesh will play a pivotal role in driving industrialization, job creation, and export potential in southern India.

It will also support the government’s vision of transforming India into a global manufacturing and energy hub by the end of the decade.

By combining the expertise of BPCL and Oil India, the project not only strengthens India’s refining footprint but also reinforces the nation’s commitment to sustainable and inclusive economic development.

As work begins on this transformative venture, it stands as a testament to India’s growing confidence in shaping its own energy future.

“Yes, there were discussions happening with Rosneft but not yet concluded,” Vetsa Ramakrishna Gupta told an analysts’ conference after the company’s June quarter earnings report.

Reuters last month reported that BPCL is in talks to buy up to 6 million metric tons of Russian oil under a term deal with Rosneft.

Indian refiners have been snapping up discounted Russian oil

since many other countries imposed sanctions on Moscow after its invasion of Ukraine. The discounts make Russian oil cheaper than similar grades from the Middle East.

But Gupta said discounts on Russian oil are shrinking compared to previous quarters.

Narrowing discounts amid tightening supply made Russian Urals oil prices for August loading jump above the $60 per barrel price cap, sources told Reuters last month.

He said, “If the crude discount comes down (further) then there is no good advantage or commercial advantage of taking Russian crude”.

An Indian government official last month said narrowing discounts and payment problems could hit India’s Russian oil imports.

Discounts have been narrowing due to Opec+’s decision to cut output.

Indian refiners mostly buy Russian oil at or below the $60 per barrel price cap fixed by the European Union and the G7 nations to restrict Russia’s oil revenue.

Gupta said so far his company has managed to settle payments for Russian oil, although it did face problems earlier when the cost crossed the price cap level.

“At least for the time being we are not foreseeing any problems because more banks are ready for settlement … we have to wait and see in case of any purchases beyond the price cap if there are any issues or not,” he said.

BPCL, the country’s second biggest state-refiner, can use about 30%-40% of Russian oil for its three refineries with combined capacity of 726,000 barrels per day.