Indian 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.
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.