Indian Oil Corporation, India’s largest oil refiner, plans to buy crude oil and liquefied petroleum gas carriers of its own, as the West Asia shipping crisis pushes freight rates and war-risk insurance sharply higher. Its board has already approved the purchase of a few vessels, and tenders were issued several months ago, finance director Anuj Jain told the company’s second-quarter earnings call.
The move marks a shift for a company that has traditionally relied on a mix of time-chartered and voyage-chartered vessels. Indian Oil is now examining three approaches: optimising its existing charter arrangements, owning ships outright, and supporting domestic shipbuilding. “The country needs oil sector companies to focus more on the shipping area now,” Jain said, adding that the company was also exploring building ships in India under the government’s Make in India initiative.
The economics behind the decision are stark. Indian Oil currently has three crude oil vessels and nine LPG vessels on time charter, arrangements Jain said had already delivered significant savings during the crisis. Its time-chartered crude carriers cost around $2 to $2.50 per barrel, against spot-market rates of as much as $8 to $10. LPG freight, normally around $40 a tonne, has risen to $160 to $180 a tonne on the spot market as tensions around the Strait of Hormuz disrupt commercial shipping.
The shipping plan is part of a wider effort to diversify crude procurement and cut exposure to supply shocks. Russia supplied 55 per cent of Indian Oil’s crude in the first half of the current financial year, with the Middle East accounting for 24 per cent, Africa about 10 per cent and Brazil 7 per cent. Spot purchases made up about 87 per cent of crude sourcing, up from around 50 per cent in the previous year. The Indian basket of crude, which averaged $65 to $70 a barrel in February, stayed above $100 for much of the first quarter and averaged about $120 in October. The company has raised crude inventories to about 39 days, from its usual 33 to 35, and is holding 20 days of LPG and 23 to 25 days of petrol and diesel.
Indian Oil reported a net profit of 21,630 crore rupees in the September quarter, against a loss of 2,661 crore rupees in the preceding quarter and a profit of 7,610 crore rupees a year earlier, helped by inventory gains and stronger performance across several businesses. Its gross refining margin was $18.52 a barrel. Jain cautioned that geopolitical developments remained a key source of uncertainty, above all for crude procurement, freight and marketing margins. The details in this article come from the company’s earnings call as reported by the Press Trust of India.
Sources: Press Trust of India, “IOC to buy crude, LPG ships as West Asia crisis exposes shipping risks”, The Hindu BusinessLine, 8 November 2026 — https://www.thehindubusinessline.com/companies/ioc-to-buy-crude-lpg-ships-as-west-asia-crisis-exposes-shipping-risks/article71680597.ece/amp/
