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* MRPL orders 1 mln bbl of U.S. oil for mid-Oct delivery - exec
* Indian refiners buying more U.S. oil to offset lost Iran supply
* All MRPL refinery units functioning, near peak capacity - exec (Adds confirmation by MRPL managing director, details)
NEW DELHI, July 5 (Reuters) - India's state-run Mangalore Refinery and Petrochemicals Ltd (MRPL) has made its first purchase of U.S.-produced Thunder Horse crude oil via a tender for mid-October delivery, its managing director M. Venkatesh said on Friday.
"The price offered was very competitive," Venkatesh said. The state-run refiner placed an order to buy 1 million barrels of the sour oil, he said.
The deal comes as Indian refiners ramp up purchases of U.S. oil to compensate for the loss of Iranian oil supplies as Washington tightens sanctions on Tehran. The widening spread between Brent and West Texas Crude <WTCLc1-LCOc1> prices is also providing a boost to Asian refiners looking to buy U.S. oil.
MRPL, which used to be Iran's second-biggest Indian oil client, operates a 300,000 barrels per day coastal refinery in the southern Karnataka state. Venkatesh told Reuters the Thunder Horse deal is the firm's second purchase of U.S. oil following a shipment of high-sulfur Southern Green Canyon oil received in February 2018.
An industry source said MRPL has placed its order with BP late on Thursday evening. The person declined to be identified due to the sensitivity of the matter.
BP could not immediately be contacted for comment.
Meanwhile MRPL's Venkatesh said all units are now operating normally at the Karnataka refinery, where crude processing was curtailed due to water shortages in early May.
"The refinery is operating at almost peak capacity," he said. (Reporting by Nidhi Verma Editing by Sam Holmes and Kenneth Maxwell)