Indian Oil plans to buy tankers and gas carriers amid Hormuz shipping disruption

what happened

State-owned Indian Oil Corporation intends to acquire its own crude oil tankers and LPG carriers. According to Moody's, the company wants tighter control over supply as disruptions around the Strait of Hormuz and soaring freight costs complicate logistics. The board has already approved buying a few vessels, and tenders were issued months ago, finance director Anuj Jain said on the call for the second-quarter results.

Besides vessel purchases, IOC is studying building ships in India under the Make in India programme. It currently has three crude tankers and nine LPG carriers on time charter. Jain said crude shipping under these contracts costs about $2-2.50 per barrel, versus $8-10 on the spot market. Spot LPG freight has risen to $160-180 per tonne from a normal level of around $40.

Spot purchases made up about 87% of crude sourcing in the first half of the current fiscal year, up from roughly 50% a year earlier. Russia supplied 55% of crude, and the Middle East 24%. In the September quarter the company posted a net profit of Rs 21,630 crore.

why it matters

For the market, this signals that Indian refiners are moving toward tighter control of logistics and more diversified supply. Freight rates and war-risk insurance remain cost items sensitive to conditions in the Middle East, and India's reliance on imports and sea routes keeps these factors relevant for crude prices.

market impact

Tanker freight and war-risk insurance: higher shipping costs for Indian refiners.

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