India’s top oil marketing companies, IOC, BPCL and HPCL, have suspended fuel supply on short-term credit to petrol pumps amid the Strait of Hormuz crisis.
Dealers must now make advance payments for petrol and diesel, as companies halt earlier credit systems such as the 3-5 day revolving credit facility.
The move aims to limit fuel offtake and manage supply risks as the West Asia conflict disrupts crude flows and tightens India’s energy supply chain.
Hormuz Crisis Forces India's Oil Giants to Suspend Fuel Credit to Petrol Pumps
HPCL and BPCL began insisting on upfront payments from last week, while IOCL halted its five-day revolving credit policy on Monday. Together, the three companies supply fuel to the majority of India's nearly 100,000 petrol pumps.
Crude Oil Slumps Freepik
Summary
Advertisement
India's three major state-run oil marketing companies, Indian Oil Corporation (IOCL), Hindustan Petroleum (HPCL) and Bharat Petroleum (BPCL) have suspended fuel supplies on credit to retail outlets and are now asking for advance payments, according to a report by Mint.
HPCL and BPCL began insisting on upfront payments from last week, while IOCL halted its five-day revolving credit policy on Monday, the report said. Together, the three companies supply fuel to the majority of India's nearly 100,000 petrol pumps.
The trigger for this tightening is the closure of the Strait of Hormuz, which has choked off around 40% of crude supplies to India. India is the world's third-largest oil consumer, with petro-product demand expected to reach 250.8 million tonnes in financial year 2027.
Uday Lodh, National President of the Consortium of Indian Petroleum Dealers (CIPD), confirmed to Mint that all three state-run OMCs have started seeking advance payments.
Advertisement
Earlier, these companies offered credit lines stretching for a few days.
Fuel outlets told Mint that two common credit facilities, the draft on delivery and revolving credit, have both been halted.
Under the draft on delivery system, dealers pay at the end of each day for fuel purchased earlier that day. Meanwhile, under the revolving credit model, pumps receive fuel on credit for three to five days and pay on the sixth day.
A third facility, electronic dealer finance, where a bank issues a letter of comfort to the OMC on behalf of the outlet for 15 to 30 days, is still continuing for now, the report added.
Why It Matters
The suspension of credit could hurt not just petrol pumps but also agriculture and industrial buyers who purchase fuel on credit. The credit model has historically allowed retailers to procure larger volumes of fuel and, in some cases, extend limited credit to bulk customers such as transporters, the report added.
Advertisement
A former petroleum secretary told the publication that such measures are typical during periods of volatility, when companies prioritise securing payments and managing risk. He added that an immediate shortage of petrol and diesel is not expected.
Government Says Supplies Are Stable
The government has sought to reassure the public. In a statement on Sunday, the Petroleum Ministry said refineries are operating at high capacity and maintaining adequate crude inventories.
The ministry said the country remains self-sufficient in the production of petrol and diesel and that no imports are needed to meet domestic demand. No cases of fuel dry-outs have been reported, it added, and supplies continue to be maintained regularly.
Notably, Iran allowed two Indian LPG-carrying vessels, Shivalik and Nanda Devi, to pass through the Strait of Hormuz. Shivalik successfully reached Mundra port on Monday, while Nanda Devi is yet to arrive at Vadinar Port.
Advertisement