Indian Oil plans to buy tankers and LPG carriers as Hormuz disruptions lift freight costs

what happened

State-owned Indian Oil Corporation, India's largest refiner, intends to acquire its own crude oil tankers and LPG carriers. The move responds to shipping disruptions around the Strait of Hormuz and sharply higher freight rates. The board has already approved buying several vessels, and tenders were issued months ago, Director of Finance Anuj Jain said on the call for second-quarter results.

The company is weighing three options: optimising existing charter contracts, owning ships and supporting domestic shipbuilding. IOC currently has three crude vessels and nine LPG carriers on time charter. Jain said these deals have delivered large savings, with crude shipping costing roughly 2 to 2.50 dollars per barrel against 8 to 10 dollars on the spot market. Spot LPG freight has climbed to 160 to 180 dollars per tonne, versus a normal level near 40.

Spot purchases made up about 87 per cent of crude sourcing in the first half of the current fiscal year, up from around 50 per cent a year earlier. Russia supplied 55 per cent of crude requirements over that period, and the Middle East 24 per cent.

why it matters

For markets, this signals that Indian refiners want tighter control over logistics amid volatile freight rates and rising war-risk insurance costs. India remains heavily dependent on imports and overseas shipping routes, so the durability of its demand for crude and LPG matters to global trade flows.

market impact

Tanker freight: IOC reduces its reliance on spot shipping, but Hormuz disruptions keep transport costs elevated

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