MRPL will supply diesel to BP for the Australian market at a premium of about $1.40 a tonne for the six months, the sources said, with pricing based on the average of Argus and Platts' Mideast Gulf spot assessments of 10ppm sulphur gasoil.

The Indian refiner previously had a similar deal with trader Vitol for supplies over April-September this year, they added.

India's diesel demand has yet to reach pre-pandemic levels, though gasoline consumption is expected to surge to its highest in 2021/22 as people eschew public transport, preferring to use their own vehicles for safety reasons.

A rise in gasoline production is leading to surplus production of gasoil, which refiners are exporting.

MRPL declined to comment on the deal while BP said it does not comment on its commercial activities.

(Editing by David Goodman)

By Nidhi Verma and Koustav Samanta