As geopolitical disruptions and regional price gaps reshape global oil flows, Indian refiners are increasingly prioritising sourcing flexibility over volume, highlighting a shift in margin strategy amidst rising import dependence and constrained domestic output.
India’s refiners are increasingly being judged not just on how much crude they buy, but on how quickly they can switch between suppliers and grades, according to a report by Yes Securities Institutional Equities. The brokerage said that flexibility in crude sourcing is becoming a bigger determinant of margins as geopolitical disruptions and wide regional price gaps reshape global oil flows.
The report said India’s dependence on imported crude rose to 88.7% in FY26 from 88.2% a year earlier, after domestic output slipped to 28.0 million metric tonnes from 28.7 million. Even so, refineries processed 272 million tonnes of crude at an average utilisation rate of 106%, underscoring how tightly the country’s refining system is running. It also noted that crude import volumes rose 1.0% year on year, even as the value of those imports fell to $123.4 billion because of lower average prices.
A key change, the report said, is the widening range of crude India now buys. The country has expanded its sourcing network from 27 countries to 41, reducing reliance on any single supply region. But domestic production remains heavily concentrated, with western offshore fields providing about 43% of output, followed by Gujarat onshore at 19%, Assam onshore at 16%, Rajasthan at 11% and eastern offshore at 10%, limiting how much local production can ease import dependence in the near term.
Industry risks remain acute. S&P Global has reported that Indian oil importers are facing a dual choke point challenge because of disruptions around the Strait of Hormuz and Bab al-Mandab, which could make replacement barrels costlier and harder to secure. Against that backdrop, Yes Securities said access to seaborne crude, the ability to run diverse grades and efficient use of India’s coastal refineries and pipeline network will matter more for margins than simple import volumes. It added that the gradual rise of alternative fuels is unlikely to displace conventional products meaningfully in the near to medium term, though it will push refiners to focus on higher-value outputs and transition-linked products.
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