Bharat Petroleum Corporation Limited (BPCL), one of the biggest Indian state-owned refiners, has bought 1 million barrels of U.S. West Texas Intermediate crude, trade sources told Reuters on Tuesday, as India looks to procure cheaper cargoes amid freight rates easing from the record highs hit in early October.
BPCL has bought the cargo for delivery at Mumbai in late December-early January, paying a premium of some $18 per barrel over Dated Brent, according to Reuters’ sources.
Last week, BPCL said it would reduce its purchases of crude oil from Russia in November as high freight costs and premiums for Russia’s crude undermine the attractiveness of Moscow’s oil compared to Middle Eastern offers.
The refiner will buy lower volumes of Russian crude in November as the Middle East grades are more commercially attractive for the company now, BPCL’s head of finance, Vetsa Ramakrishna Gupta, said.
Russian crude oil accounted for 37% of BPCL’s crude supplies in the quarter July to September, the executive said.
But the purchases of Russian cargoes for November will be “significantly reduced” due to the higher shipping costs, according to Gupta.
BPCL’s crude sourcing decision is generally in line with the recent trend for lower imports of Russian crude oil in India, due to the higher costs compared to Middle Eastern cargoes, whose availability has increased with the rise of flows through the Strait of Hormuz.
At the same time, eased freight rates in the past two weeks have prompted Asian crude oil buyers, Chinese in particular, to seek cargoes from Brazil and West Africa.
Freight rates have eased from the record highs seen in early October, but they were still about $60 million for a supertanker to carry oil from the U.S. to Asia in the middle of October. The cost was so high that Asian refiners weren’t ordering much crude from the U.S. for November delivery.
By Tsvetana Paraskova for Oilprice.com
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