Indian Oil Refiners Hire Tankers to Cross Strait of Hormuz as Shipping Strategy Shifts

Indian oil refiners are changing the way they bring crude home from the Persian Gulf, hiring tankers to sail through the Strait of Hormuz and pick up supplies directly from the region. 

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The move marks a shift from the approach refiners adopted earlier in the US-Iran war, when they avoided sending their own hired vessels through the waterway because of the risk of attacks. Instead, Gulf producers and international traders handled the journey and delivered crude to India, with refiners paying a sizeable premium for taking on that risk. 

Now, with oil flows through Hormuz recovering in recent months, Indian refiners are beginning to take greater control of the shipping themselves. 

Refiners Approach Shipping Companies for Tankers 

Indian processors have issued tenders and are holding discussions with shipping companies to secure vessels for the journey, according to people familiar with the matter cited in the report. 

Sinokor Group and Dynacom Tankers Management have so far secured tenders. Shipping Corporation of India and Lila Global also submitted bids, although those tenders were later cancelled. 

Indian Oil Corporation, Reliance Industries, Bharat Petroleum Corporation and HPCL-Mittal Energy have recently bought Iraqi crude on a free-on-board, or FOB, basis. 

Under such deals, the buyer takes responsibility for arranging a vessel to collect the crude and transport it to its destination. 

That gives Indian refiners greater control over their shipping costs, though securing suitable tankers for the journey remains a challenge. 

Indian Oil, Reliance, Bharat Petroleum, HPCL-Mittal, Sinokor, Dynacom, Shipping Corporation of India and Lila Global did not immediately respond to requests for comment cited in the report. 

Hormuz Oil Flows Recover 

The change comes as crude shipments through the Strait of Hormuz move closer to levels seen before the war. 

Middle East crude shipments have recovered to 98% of pre-war levels, according to a JPMorgan Chase note cited in the report. 

Saudi Arabia’s East-West pipeline has also returned to operation. 

At the same time, India has become more reluctant to take Russian crude amid growing political pressure from the United States, according to the report. 

Rules for Indian Seafarers Were Relaxed in August 

Indian refiners had also faced restrictions when trying to collect crude from inside the Gulf because New Delhi was not allowing vessels making the journey to use Indian crew. 

That changed in August when the Directorate General of Shipping softened its advisory. 

Instead of barring Indian seafarers from travelling through the Strait of Hormuz, shipowners and placement agencies were asked to obtain their consent before making the passage. 

The change removed one of the hurdles refiners faced when arranging vessels for Gulf crude. 

Iraqi Crude Discounts Add Another Factor 

Pricing has also entered the equation. 

SOMO, Iraq’s state-owned oil marketer, has been offering discounts of as much as $37 a barrel below regional benchmarks for contracted October supplies, according to the report. 

Meanwhile, the amount of oil moving through Hormuz towards India has risen sharply. 

Flows averaged around 1.3 million barrels a day in September, according to Kpler. That was the highest level since February, before the war began. 

India’s overall crude imports from the Middle East are around 2.8 million barrels a day, including Saudi supplies transported through the Red Sea. 

With traffic through Hormuz recovering and refiners increasingly arranging their own vessels, India’s oil companies are moving away from relying entirely on suppliers and traders to handle the risky Gulf passage. The change gives refiners more control over logistics and costs, even as securing ships for the journey remains far from straightforward.