Indian oil refiners shift to direct tanker hires for Persian Gulf crude

Indian oil refiners are changing their logistics strategy to secure supply chains and reduce costs by hiring their own tankers to transit the Strait of Hormuz. Companies including Indian Oil Corp., Reliance Industries Ltd., Bharat Petroleum Corp., and HPCL-Mittal Energy Ltd. have begun purchasing Iraqi crude on a free-on-board (FOB) basis. This shift moves the responsibility of logistics from international traders to the refiners themselves.

Refiners have issued tenders for shipping, with Sinokor Group and Dynacom Tankers Management Ltd. recently securing contracts. Previously, India avoided direct transits due to security risks and a government ban on using Indian crews in the region. However, in August, the Directorate General of Shipping updated its advisory to allow the use of Indian seafarers with their consent.

This tactical change follows a recovery in regional flows, with Middle Eastern crude shipments reaching 98% of pre-war levels. Additionally, Iraq’s SOMO has offered discounts of up to $37 a barrel for October supplies. Data from Kpler shows September flows to India reaching 1.3 million barrels a day, the highest volume since February. What to watch: Whether refiners sustain direct tanker operations amid fluctuating regional security and shifting global trade pressures.

Editor's note: The article provides a concise and accurate summary of the logistics shift by Indian refiners, correctly citing the recent regulatory changes and market data.

This article is AI-generated and fact-gated. Original reporting: Economic Times