Indian fuel demand has collapsed following a nationwide lockdown to prevent the spread of COVID-19 India will divert 19 million barrels of Gulf oil from state-run firms to strategic petroleum reserves (SPRs), skipping direct purchases from producers to help refiners get rid of extra oil as their storage is full, three sources said. India’s decision to divert cargoes meant for state refiners will not soak up excess oil from the market following the demand collapse caused by the coronavirus pandemic, but it will help local companies to avoid demurrage charges at a time of expensive freight. It also secures purchases at a low price. The Indian Strategic Petroleum Reserves Ltd. (ISPRL), a company charged with building SPRs, had planned to buy oil directly from Saudi Arabia and the UAE to fill the caverns, sources said last month. Since then situation has changed as Indian fuel demand has collapsed following a nationwide lockdown to stem the spread of the coronavirus, leading some refiners to declare force majeure on crude purchases. Force majeure exonerates parties from contractual obligations because of circumstances beyond their control. “It is good for ISPRL as it is getting crude at the April official selling prices of Saudi and U.A.E,” one source said on condition of anonymity. Global oil prices rose to around $32 a barrel on Wednesday, continuing a recovery from 18-year lows hit last week, ahead of a meeting on Thursday of the Organization of the Petroleum Countries and other producers on output cuts to prop up the market. India’s state refiners have resorted to exporting refined products to avoid full closure of their plants after local fuel demand collapsed. The world’s third biggest oil importer, India has built SPRs at three locations in southern India to store about 37 million barrels of oil or about 5 million tons to protect against supply disruption. Another source said that Indian refiners have until the third week of May to supply oil as the unloading of Very Large Crude Carriers (VLCCs) at Mangalore port stops then because of monsoon rains. Hindustan Petroleum will supply 400,000 barrels of Iraqi oil to fill the nearly 7.5-million-barrels Vizag storage in the southern state of Andhra Pradesh, the sources said. India has already stored Iraqi oil in Vizag cavern. The UAE’s Abu Dhabi National Oil Co. (ADNOC) has leased half of the nearly 11-million-barrel Mangalore storage, while the ISPRL has bought 4 million barrels of Saudi oil for 18.5-million-barrel Padur storage. The facilities are in Karnataka state. Indian Oil Corp. will divert 2 million barrels of Saudi oil and 5.7 million barrels of ADNOC oil, they said. Mangalore Refinery and Petrochemicals Ltd. will move its 6 million barrels and Bharat Petroleum Corp. will provide 4.6 million barrels of Saudi oil for the caverns, the sources said. The four state refiners did not respond to Reuters emails seeking comments. ISPRL’s managing director H.P.S. Ahuja declined to comment. ISPRL has signed memorandum of understandings with ADNOC to lease half of Padur facility and with Saudi Aramco for a quarter. Pending final agreements with ADNOC and Saudi Aramco, India decided to help state refiners, one of the sources said. “It is cheaper to divert the cargoes rather than keeping them floating . . . it is a win-win situation for all,” this source said.