Indian state-owned oil refiners Indian Oil Corp (IOCL) and Hindustan Petroleum Corp (HPCL) stepped up crude purchases last week, securing approximately 7 million barrels through separate tenders, according to sources cited by Reuters. The move comes as India rebuilds its crude inventories after they declined due to disruptions in the Strait of Hormuz. Meanwhile, oil prices fell by more than 1% on Monday after OPEC+ agreed to further increase output targets from August, with Brent crude futures down $1.02 (1.41%) at $71.10 a barrel and US West Texas Intermediate (WTI) crude falling 80 cents (1.16%) to $67.89 a barrel.
Supply-Side Intelligence
OPEC+ and its allies, including Russia, agreed on Sunday to increase output targets by a further 188,000 barrels per day (bpd) from August, following similar increases for June and July, according to Reuters. However, the increase has largely remained on paper because the US-Israeli war on Iran disrupted tanker traffic through the Strait of Hormuz for key OPEC producers, including Saudi Arabia, Kuwait and Iraq, limiting their output.
Oil prices had remained largely unchanged last week after declining for most of the previous few weeks, with investors watching talks between the US and Iran over shipping through the Strait of Hormuz while also tracking the recovery in Gulf oil exports.
Demand-Side: Indian Refiners Buy Big
IOCL accounted for 5 million barrels of the purchases. The company secured 1 million barrels of Angola's Kissanje crude from Cathay Petroleum, 2 million barrels of Nigeria's Agbami and Usan crude from Trafigura, and another 2 million barrels of Angola's Nemba and Dalia crude from Chevron, according to Reuters. These cargoes are scheduled to arrive between late August and early September.
HPCL purchased 2 million barrels of Brazil's Tupi crude, with deliveries planned for August and September, the sources told Reuters.
India's Crude Inventories Recover
India's crude inventories have recovered sharply after declining in recent months due to the Strait of Hormuz disruptions. At the end of February, the country’s crude stockpiles stood at 107 million barrels, marking the highest month-end level in the previous 12 months, according to Reuters. As the conflict disrupted imports, refiners drew on existing inventories to keep refinery operations running, bringing stocks down to 95.5 million barrels by the end of March and further to 90.5 million barrels at the end of April.
Since then, stronger import volumes have helped rebuild inventories. According to estimates from Kpler, a global real-time data and analytics provider, India's crude oil inventory reached 104 million barrels at the end of June, bringing stock levels close to a one-year high.
| Month-End | Crude Stockpiles (million barrels) |
|---|---|
| February | 107 |
| March | 95.5 |
| April | 90.5 |
| June | 104 |
Price Outlook and Key Data
Brent crude futures settled 0.45% higher on Friday but dropped sharply on Monday as OPEC+'s planned output increase weighed on sentiment. The market remains focused on the recovery of exports via the Strait of Hormuz and the outcome of US-Iran talks. Any further disruption to tanker traffic could tighten global supplies, while a successful resumption of flows would add to the oversupply pressure from OPEC+'s quota increases.
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