IOC Buys First Ecuador Crude Cargo as It Diversifies Oil Imports amid Global Disruptions

Indian Oil Corporation (IOC) has purchased its first-ever cargo of crude oil from Ecuador as it looks to widen its sourcing options and reduce risks linked to disruptions in Russian oil supplies.

The company bought around 2 million barrels of Ecuador’s Oriente crude for delivery at the end of March through a tender, without disclosing pricing or the seller, according to Reuters.

The move comes amid tighter global restrictions on Russian oil flows. Sanctions imposed by the United States and the European Union on Russian producers and shipping vessels have made imports from Russia more complex, prompting Indian refiners to scout for alternative crude sources to ensure supply stability.

While Russia and the Middle East reportedly remain IOC's primary suppliers, the refiner has historically limited purchases from South America.

However, it has optional sourcing arrangements with Mexico, Brazil and Colombia. In recent months, IOC has stepped up diversification efforts, including the purchase of 2 million barrels of Colombia’s Castilla crude last month.

This comes at a time when analysts are closely watching policy developments ahead of the Union Budget for FY27, which could impact downstream oil marketing companies like IOC. Brokerage firm JM Financial has cautioned that high domestic fuel margins may invite policy intervention.

According to JM Financial, global crude prices have remained relatively low at around $60 per barrel due to oversupply, while domestic fuel marketing margins have risen sharply above historical levels. The brokerage estimates petrol and diesel marketing margins at over ₹10 per litre, compared with a long-term average of about ₹3.5 per litre.

These elevated margins have supported "windfall-like" gains for IOC and other oil marketing firms in recent quarters. However, the brokerage firm has warned that such gains may not be sustainable in a tightly regulated sector.

The brokerage expects the government may consider raising excise duty on petrol and diesel by ₹3–₹4 per litre in the upcoming Budget, a move that could boost government revenues but squeeze fuel retailers’ profitability.