Mangalore Refinery and Petrochemicals Ltd (MRPL) is increasing its purchases of crude oil on a delivered basis to minimise exposure to shipping risks arising from the ongoing Iran conflict and reduce freight costs, the company’s Chief Financial Officer (CFO), Devendra Kumar, said on Wednesday.
The move comes amid continued disruptions to shipping through the Strait of Hormuz, where attacks on vessels by Iranian forces during the eight-month-long conflict have heightened concerns over maritime security and crude oil transportation.
In response, Middle Eastern oil producers have increasingly offered crude through ship-to-ship transfers outside the Strait of Hormuz, alongside freight discounts on delivered-basis supplies. Under Delivered-at-Port (DAP) arrangements, the supplier assumes contractual responsibility for transporting the cargo to the agreed destination, reducing the buyer’s direct exposure to shipping-related risks.
“To de-risk, we would continue to insist on DAP cargoes, but going forward we will evaluate purely based on our delivered economics when things stabilise,” Kumar said during an analyst meeting.
MRPL is also diversifying its crude sourcing to ensure uninterrupted operations at its 300,000 barrels-per-day refinery in southern Karnataka.
During the September quarter, approximately 20% of the company’s crude oil requirements came from the Middle East, while Russia accounted for around one-third. Domestic crude contributed approximately 25%, with the balance sourced from regions including West Africa and the Americas.
Kumar indicated that the company hopes Middle Eastern producers will extend delivered-basis supplies under annual crude purchase agreements, potentially marking a shift from the traditional Free-on-Board (FOB) arrangements, under which buyers are responsible for arranging shipping.
He said MRPL expects some of the alternative supply arrangements being introduced by producers in response to current geopolitical and shipping disruptions to continue even after the situation stabilises.
Meanwhile, MRPL is prioritising domestic fuel demand amid rising consumption in India. Kumar indicated that the company’s fuel exports could decline over the next couple of months as a greater share of refined products is directed towards meeting domestic requirements.
The shift highlights how geopolitical tensions and maritime security risks are influencing crude procurement strategies, freight arrangements and supply-chain decisions among Indian refiners, with delivered-cost economics gaining importance in an increasingly uncertain global shipping environment.