Full Breakdown
Indian Refiners Charter Tankers to Transit the Strait of Hormuz
By Drooid · · How we work
Shift in Procurement Strategy
Indian Oil Corp., Reliance Industries Ltd., Bharat Petroleum Corp. and HPCL-Mittal Energy Ltd. have begun tendering for tanker contracts that will sail through the Strait of Hormuz to load crude directly from the Persian Gulf. The move replaces the long-standing reliance on cost-and-freight (C&F) shipments arranged by Gulf producers and international traders. By purchasing crude on a free-on-board (FOB) basis, the refiners assume responsibility for vessel chartering, loading and delivery, giving them tighter control over logistics and the potential to reduce the premium previously paid for C&F transport.
Background & Context
Since the early stages of the U.S.–Iran conflict, Indian refiners avoided sending their own vessels through the waterway because of attack risk, paying a premium to have Gulf exporters or third-party traders bear the transit risk. Recent developments have altered that calculus:
- Oil flows through the Strait have rebounded to about 98 % of pre-war levels, according to JPMorgan Chase & Co.
- Saudi Arabia’s East-West pipeline has been restored.
- In August, the Directorate General of Shipping softened its advisory, requiring shipowners to obtain crew consent rather than imposing a blanket ban.
- U.S. pressure on India to limit Russian oil imports has made Middle-Eastern supplies more attractive.
These factors, combined with pricing from Iraq’s state-owned marketer SOMO, have prompted the shift.
Data & Statistics
- Crude volumes through Hormuz to India: ? 1.3 million barrels per day in September, the highest since February (Kpler).
- Overall Middle-East imports: ? 2.8 million barrels per day.
- Discounts on Iraqi crude: SOMO offered contracts for October at up to $37 per barrel below regional benchmarks.
- Shipment recovery: JPMorgan reports Middle-East shipments at 98 % of pre-war volumes.
Official Statements & Responses
The Directorate General of Shipping’s revised advisory in August instructs shipowners and placement agencies to secure Indian seafarers’ consent before voyages through the Strait. A JPMorgan note highlighted the near-full recovery of oil flows and the restored Saudi pipeline as market drivers. Kpler’s senior manager of modeling, Sumit Ritolia, said the discount on Iraqi crude is compelling but sourcing oil from the Strait still entails elevated shipping and operational risks. Representatives of the listed companies did not respond to requests for comment.
Verbatim Quotes
- “The discount is attractive, but the key issue is that the crude still needs to be sourced from inside the Strait of Hormuz, where shipping and operational risks remain elevated,” — Sumit Ritolia, senior manager of modeling at analytics firm Kpler
What’s Next
Indian refiners are expected to keep securing tanker capacity for FOB purchases while Hormuz-transit risks remain manageable and price differentials persist. Monitoring flow levels, further guidance from the Directorate General of Shipping and any shifts in U.S. policy toward Russian oil will shape future procurement decisions.