Bharat Petroleum Corporation Ltd (BPCL) is preparing for a potential shift in its crude sourcing strategy as geopolitical pressures mount, particularly due to the threat of secondary sanctions on Russian oil by the United States. A senior executive at the state-run oil marketing company told Moneycontrol that the firm is exploring alternatives such as the Middle East and the United States to mitigate risks.

BPCL’s Russian Crude Dependency Under Scrutiny

BPCL currently sources around 30 percent of its crude oil imports from Russia, a figure that surged since the onset of the Ukraine war when Western sanctions pushed Russia to offer deep discounts to buyers like India. However, with Donald Trump threatening to impose tariffs on countries continuing to purchase Russian oil unless Moscow ends the war, this dependence has become a strategic risk.

According to the BPCL official (who remained unnamed), "there is enough oil in the Middle East, and we also have ties with the US." This statement underscores the company’s readiness to adapt to evolving global scenarios and reduce its reliance on high-risk energy suppliers.

Impact of US Sanctions on Indian Oil Imports

The recent escalation in the US stance against Russian oil buyers is alarming. If secondary sanctions are imposed, oil prices are expected to rise sharply, leading to inflationary pressure across the commodity spectrum and potentially triggering a global recession. Prashant Vasisht, VP and co-head of corporate ratings at ICRA, stressed the gravity of such a move, stating it could have serious economic consequences worldwide.

India is particularly vulnerable to global energy price fluctuations since it imports around 85 percent of its oil needs. A sudden price spike could hamper India's growth targets, especially as the country eyes a GDP growth rate of 6.5 percent in FY26.

Crude Price Movements Reflect Trade War Fears

As geopolitical tensions rise, global crude prices have already started falling amid concerns over a trade war between the US and China. On April 7, Brent crude dropped by 4 percent to $63.21 per barrel, while West Texas Intermediate fell to $59.79. This marks a nearly four-year low, highlighting the volatile nature of the global oil market.

India’s Evolving Crude Oil Import Strategy

Despite its growing reliance on Russian oil over the last two years, India has been diversifying its energy sources. From sourcing oil from 27 countries in 2007, India now imports from 40 nations, a strategic shift endorsed by Petroleum Minister Hardeep Singh Puri. This is aimed at buying the cheapest crude in a fluctuating global market and maintaining energy security.

India imported approximately 1.9 million barrels per day (bpd) from Russia in March 2024, an increase of 480,000 bpd month-on-month, according to Kpler, a global commodity market analytics firm. Despite growing volumes, India is wary of overdependence on any single supplier, especially one mired in geopolitical controversy.

The Trump Factor: Trade Wars and Tariffs

The return of Donald Trump to the US political arena brings back the rhetoric of reciprocal tariffs and aggressive foreign policy, particularly concerning energy trade. His warning to countries buying Russian oil has shaken global energy markets, and India is already preparing contingencies to avoid getting caught in the crossfire.

In 2022, India imported just 0.2 percent of its oil from Russia. That figure rose drastically due to discounted pricing amid Western sanctions. However, with Trump’s threat of sanctions, such discounted imports could turn into costly liabilities.

The Bigger Picture: India’s Macroeconomic Concerns

The stakes are high for India. A significant rise in crude prices could derail inflation control, weaken the rupee, and raise the fiscal burden due to higher subsidy requirements. Lower oil prices are essential for India’s growth targets, especially when exports might decline due to rising protectionism in global trade.

A senior government official said that India’s economic momentum depends on crude staying under $70 a barrel, which would balance out export losses from possible US tariffs.

India’s Strategy Going Forward

BPCL’s decision to proactively seek crude from the Middle East and US suppliers is a clear sign of India’s pragmatic approach to navigating uncertain global trade dynamics. It also reflects a broader national strategy to:

• Reduce overreliance on one supplier

• Adapt to evolving geopolitical realities

• Secure energy at competitive prices

The move is also expected to set a precedent for other Indian oil companies, many of whom had ramped up Russian crude imports post-2022.

Conclusion

BPCL’s strategic pivot away from Russian oil marks a significant shift in India’s energy diplomacy. As threats of sanctions loom large, and oil markets react to changing dynamics, India is wisely preparing itself to avoid overexposure to volatile regions. This development also highlights how energy policies are deeply tied to geopolitics, and how Indian oil companies must remain agile and adaptive to ensure long-term sustainability.

With oil prices dropping temporarily, India has a window of opportunity to reset its import strategy, deepen ties with stable partners like the Middle East and the US, and ensure its growth engine keeps running smoothly despite global headwinds.

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