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Informist, Thursday, Aug. 13, 2026

MUMBAI — Indian refiners are seeking deeper domestic commodity markets, including a local price-discovery mechanism for refinery exports and greater regulatory flexibility for hedging, as geopolitical disruptions expose vulnerabilities in crude supplies and increase price volatility.

Chennai Petroleum Corp. Ltd. Director (Finance) Rohit Kumar Agrawala said replacing West Asian crude with Russian Urals has been critical for Indian refiners but any simultaneous disruption to supplies from both the regions would pose a major challenge to the country's refining system. A majority of the substitution of the West Asian oil comes from the Russian Urals, Agrawala said at the Global Commodity Conclave 2026. If supplies from both sources are disrupted, Indian refiners would have to look to other geographies, which could require significant changes to refinery configurations and take time, he said.

Agrawala said crude and natural gas have historically been significantly more volatile than other commodities, making price, inventory and currency risk management critical for refiners. Refiners are essentially in the business of managing price volatility, cash flows, and margins rather than simply protecting commodity prices, he said.

Meanwhile, Hindustan Petroleum Corp.'s Executive Director for International Trade Rajiv Malkan said refiners need exemptions from the Securities and Exchange Board of India for some large hedging transactions, along with a broader reporting framework. "Some exemptions to some of the big measures" are needed from the regulator to enable greater hedging activity, Malkan said, while also calling for greater participation from mutual funds, pension funds and banks to improve liquidity in domestic derivatives markets.

Malkan also said India needs a domestic price-discovery mechanism for refinery exports instead of continuing to rely primarily on international markers such as Singapore, Arab Gulf and Northwest Europe benchmarks. India is already a major exporter and is expected to become a much larger exporter as refining capacity expands, he said. Refiners should therefore work towards an "India marker" where domestic refiners participate and price discovery takes place closer to the physical market. Malkan said domestic exchanges also need longer-tenor contracts and larger tick sizes to make hedging more practical and cost-effective for refiners. 

Other panellists at the event also called for greater participation by corporates and other market players on Indian exchanges, saying deeper domestic markets could eventually allow companies to meet more of their hedging requirements within India rather than relying on overseas markets.  End

Reported by Kabir Sharma and Sagar Sen

Edited by Akul Nishant Akhoury

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