State-run Bharat Petroleum Corporation (BPCL) said on Thursday that traders have stopped offering discounts on Russian crude oil for delivery in September 2026, according to The Hindu BusinessLine. The development comes as Houthi rebels have threatened to block the Bab al-Mandab Strait and attacked vessels carrying Saudi crude, pushing Brent crude past $100 per barrel on Thursday.
Supply Disruptions and Geopolitical Risks
The Red Sea route has become increasingly risky due to recent attacks. BPCL's Director (Finance), VRK Gupta, stated during a post-results analyst call: "Till August we have completed the deals, including Russian Urals and ESPO. September offers are coming. We have to wait, maybe next one week, we will come to know what will be the discount scenario. But, definitely based on the recent development in the crude market now no one is offering any discount for Russian crude." Gupta noted that markets had seen a brief period of stability in June, but the latest geopolitical developments have reminded how quickly the landscape can change. While BPCL has sufficient crude until August 31, 2026, and maintains 30 days of crude stocks, the September 2026 window has opened with only a couple of cargoes booked so far. The company expects to complete deals in the next 7-10 days, but has "no visibility beyond September."
BPCL’s Sourcing Strategy and Diversification
To navigate the West Asia conflict during Q1 FY27, BPCL proactively optimised its crude sourcing. According to Gupta, disruptions in tied-up term crude volumes led the company to significantly increase spot crude purchases, with the spot percentage rising to almost 69% in Q1 FY27 from 44% in the same period a year earlier. BPCL diversified its crude sourcing outside the Strait of Hormuz, exploring multiple geographies and increasing the share of Russian crude grades to 38% of total procurement during the quarter. The company also procured two new crude grades from Venezuela and Angola.
Financial Impact and Q1 Results
On Wednesday, BPCL posted a consolidated net loss of approximately Rs 1,873 crore for Q1 FY27, impacted by the West Asia conflict and the company's decision to keep retail prices of diesel, petrol, and LPG stable even as Brent crude surpassed $100 per barrel. The loss was attributed mainly to suppressed marketing margins on certain petroleum products, partially offset by higher refining margins. LPG under-recoveries stood at Rs 15,803.74 crore as of June 30, 2026, compared to Rs 12,318.52 crore as of March 31, 2026.
| Metric | Value (Rs crore) |
|---|---|
| LPG under-recoveries as of June 30, 2026 | 15,803.74 |
| LPG under-recoveries as of March 31, 2026 | 12,318.52 |
"Based on recent issues in the Red Sea route, there may be certain issues in terms of couple of cargoes, but otherwise we have sufficient crude oil till August 31, 2026." — VRK Gupta, Director (Finance), BPCL
For commodity traders and procurement teams, the elimination of discounts on Russian crude adds upward pressure on sourcing costs, while BPCL's aggressive spot purchasing and grade diversification highlight the premium on supply chain flexibility. The Brent price above $100/bbl and the Houthi threat to the Bab al-Mandab remain key risk factors, with the next 7-10 days critical for September pricing visibility.
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