Indian refining companies are actively seeking tankers for hire to transport crude oil from the Persian Gulf through the Strait of Hormuz, according to Bloomberg reporting citing unnamed sources. Two shipping companies have successfully won tenders for Persian Gulf oil, while another two companies submitted bids that were subsequently canceled. This marks a significant tactical shift for Indian refiners.
Previously, these companies had avoided using Indian-flagged tankers to import crude from the Persian Gulf due to heightened security risks and attack concerns. Recent incidents have underscored these dangers, with three tankers struck by unknown projectiles in the Strait of Hormuz this week, according to the UK Maritime Trade Operations outlet. Indian refiners, including Indian Oil, Reliance, Bharat Petroleum, and HPCL-Mittal, have historically relied on transportation services provided by Gulf state oil producers and international energy majors.
However, these arrangements came at a substantial premium, as freight and insurance costs for Middle East routes have surged dramatically following the February 28th U.S. and Israeli strikes on Iran that triggered the regional conflict. The shift toward chartering independent tankers appears driven primarily by cost considerations. These refiners have increasingly turned to free-on-board Iraqi crude, where the buyer assumes responsibility for transportation logistics.
Iraq's state oil marketer SOMO is offering discounts of up to 37 percent relative to Middle Eastern benchmarks for October-loading cargoes, making Iraqi crude an economically attractive alternative despite the necessity of arranging separate transportation. Recent data from Kpler indicates that India has been substantially increasing its Middle Eastern oil imports. For September, average daily intake from Middle Eastern producers reached 3 million barrels, while Russian crude imports declined as Indian refiners responded to U.S. threats of 100 percent tariffs on Indian imports for continued Russian oil purchases.
Despite this shift, Russia maintained its position as India's single largest oil supplier, with daily imports of 1.75 million barrels recorded last month. The strategic move to charter independent tankers reflects the complex balancing act faced by Indian refiners seeking to secure crude supplies while managing both geopolitical risks and escalating transportation costs in one of the world's most critical energy chokepoints.
Source: oilprice.com