Mangalore Refinery and Petrochemicals Ltd (MRPL) has implemented a multi-layered strategy to diversify its crude oil sourcing and strengthen supply security, helping the company navigate disruptions from geopolitical tensions and supply chain chokepoints, according to MRPL's annual report for 2025-26.
Diversified crude sourcing strategy
MRPL's crude oil basket comprises 273 different grades sourced from multiple regions worldwide, ensuring no single-point dependency and operational continuity, the report said. Crudes have been sourced from Asia, South America, Africa, the USA and Russia, both on a term basis from national oil companies and on a spot basis from the open market.
New crudes processed during the year included Hout (Neutral Zone between Saudi Arabia and Kuwait), Mostarda and Gindungo (Angola), and Sarir Mesla (Libya). The report noted that the global crude oil market remained volatile during 2025-26, driven by geopolitical tensions, production decisions by major oil-exporting nations and shifting demand patterns.
Operational performance and GRM rebound
MRPL processed 16.774 million tonnes of crude oil in 2025-26, with refinery capacity utilisation at about 111.8 per cent — operating beyond its rated capacity despite global maritime and geopolitical disruptions. The company also increased LPG production by around 30 per cent to support domestic fuel supply requirements during March 2026.
Gross refining margin (GRM) for 2025-26 was $9.22 a barrel, a significant rebound from $4.45 a barrel in 2024-25, driven by stronger product cracks and a more favourable crude basket.
| Metric | 2025-26 | 2024-25 | Change |
|---|---|---|---|
| Crude processed (million tonnes) | 16.774 | — | — |
| Capacity utilisation (%) | 111.8 | — | — |
| GRM ($/barrel) | 9.22 | 4.45 | +107% |
Supply security measures
The company said it has strengthened supply security through collaboration with Indian Strategic Petroleum Reserves Ltd to utilise one of its underground crude storage caverns, enhancing crude inventory management and mitigating risks from geopolitical volatility and shipping disruptions. The report highlighted that critical logistical chokepoints, particularly the Strait of Hormuz, delayed the timely arrival of crude cargoes, impacting operational stability and supply continuity.
“Although our strategic diversification efforts are based on qualitative, quantitative, and commercial assessments, we remain steadfast in our commitment to maintaining a well-balanced sourcing portfolio across both regional and domestic producers. This disciplined approach enhances our ability to capture emerging opportunities while effectively mitigating risks, contingent upon crude availability, quality compatibility, voyage economics, and operational considerations remaining optimally aligned for efficient processing,” the report said.
MRPL has adopted a flexible and responsive crude procurement strategy, underpinned by a judicious blend of long-term contractual arrangements and opportunistic spot purchases, complemented by prudent inventory buffers.
Implications for commodity traders and analysts
For commodity traders and procurement teams, MRPL's diversified sourcing model — covering 273 grades from multiple regions — signals a structural shift in refinery procurement strategies to hedge against geopolitical supply risks. The ability to process a wide variety of crudes (including niche grades like Hout and Sarir Mesla) enhances flexibility and may influence spot market dynamics for medium-sour crudes. The sharp GRM recovery from $4.45 to $9.22 per barrel reflects improved product cracks and crude basket optimization, a trend worth monitoring for refining margin forecasts. The use of strategic storage via Indian Strategic Petroleum Reserves Ltd also underscores the growing importance of inventory buffers in supply chain resilience planning.
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