Advance payment only: IOCL, BPCL, HPCL tighten payment rules as West Asia war rattles supplies

IOCL, BPCL, HPCL shift to advance payments; dealers warn of demand hit, stress for bulk buyers

• State oil firms halt credit fuel supplies to retailers
• Advance payments needed due to disrupted crude supply routes
• Supply disruptions may hit bulk buyers in agriculture and transport

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State-run oil marketing companies have suspended fuel supplies on credit to retail outlets, tightening payment terms as global crude supply chains are disrupted by the closure of Iran’s Strait of Hormuz, four people aware of the development told Mint.

Hindustan Petroleum Corp. Ltd (HPCL) and Bharat Petroleum Corp. Ltd (BPCL) began insisting on advance payments from last week, while Indian Oil Corp. Ltd (IOCL) halted its five-day revolving credit policy on Monday, the people said, requesting anonymity.

The move marks a shift from the earlier system that allowed dealers short-term credit to procure fuel.

The decision carries weight as the three OMCs supply the majority of India’s nearly 100,000 petrol pumps.

It also comes at a time when the West Asia conflict has disrupted about 40% of India’s crude supply routes, raising concerns for the world’s third-largest oil consumer. Petro-product demand in India is projected to reach 250.8 million tonnes by FY27.

Apart from retail outlets, bulk buyers in agriculture, transport and industry, many of whom rely on credit, could also face disruptions.

The Union petroleum ministry and the oil marketing companies did not respond to queries from Mint.

However, multiple fuel distributors confirmed the development. Moneycontrol could not independently verify the report.

Uday Lodh, national president of the Consortium of Indian Petroleum Dealers (CIPD), said all three state-run OMCs have started seeking advance payments.

“Earlier, these companies offered some credit lines stretching for a few days,” he said. CIPD represents about 30,000 petrol pumps across the country.

OMCs typically offer multiple credit mechanisms to dealers:

• Draft on delivery: payment at the end of the day for same-day purchases
• Revolving credit: fuel supplied on 3–5 day credit, payment on the sixth day
• Electronic dealer finance: bank-backed credit for 15–30 days

According to dealers, the first two facilities have now been halted, while electronic dealer finance continues for now.

The credit system has historically enabled retailers to procure larger fuel volumes and extend limited credit to regular bulk customers.

A former petroleum secretary told Mint 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.

The government has also maintained that supplies remain stable.

In a statement on Sunday, the petroleum ministry said refineries are operating at high capacity and maintaining adequate crude inventories.

“Our country remains self-sufficient in the production of petrol and diesel and no imports are required to meet domestic demand. No cases of fuel dry-outs have been reported, and supplies continue to be maintained regularly,” the ministry said.