OMCs Halt Credit Fuel Supply To Dealers Amid Oil Crunch
State-owned oil companies have tightened credit terms for fuel dealers amid supply disruptions caused by the West Asia conflict. With crude prices elevated and flows via the Strait of Hormuz impacted, firms like HPCL, BPCL and IOC have curtailed credit facilities, even as the government says supplies remain adequate.
State-owned oil marketing giants in India have tightened payment terms for retail outlets amid the supply crunch due to the United States-Israel-Iran war.
Companies like Hindustan Petroleum and Bharat Petroleum have suspended fuel supply on credit to retail outlets while Indian Oil has halted its five-day revolving credit policy on Monday, according to reports.
The three companies supply fuel to majority of the country’s 1 lakh petrol pumps. Earlier, the companies allowed dealers short-term credit to procure fuel.
Since the start of the war in West Asia late in February, the supply of crude oil through the Strait of Hormuz has come to a halt. The narrow but crucial waterway off the cost of Iran and Oman used to give way to 20 percent of the world’s crude oil supply.
For India, which is dependent on imports for over 80 percent of its energy needs, the strait contributed to 40 percent of its fuel needs.
Since the war started, oil prices have jumped almost 50 percent, rising from almost $65 per barrel to as high as $120 per barrel at one time, its four year high since the Russia-Ukraine war in 2022.
The commodity has since then cooled a but still remains elevated above the $100 per barrel mark.
Crude oil prices climbed nearly 3 per cent on Tuesday, rebounding from the previous session’s losses as renewed concerns over supply amid disruptions in the Strait of Hormuz.
Brent crude futures were trading at $103.20 per barrel, up 2.98 per cent, while US West Texas Intermediate (WTI) crude rose 3.05 per cent to $96.36 per barrel around 9:45 am.
While fuel prices in the world’s third largest oil consumer have remained stable so far, the crunch of natural gas has hit the consumers hard. The government has said that oil companies were running at their full capacity to ensure the fuel supply remains adequate during the geopolitical crisis.
