Indian Oil Plans to Buy Ships to Secure Crude Oil, LPG Imports

Indian Oil Corporation (IOC) plans to acquire its own crude oil tankers and LPG carriers to strengthen its import supply chain and reduce dependence on the volatile shipping market amid geopolitical uncertainties in West Asia.

IOC Director (Finance) Anuj Jain said during the company’s October 31 earnings call that tenders for purchasing a few vessels had been issued several months ago. The company is also exploring options to build ships at Indian shipyards under the government’s Make in India initiative.

Indian Oil currently operates three crude oil tankers and nine LPG carriers on time charter, which have helped contain transportation costs despite a sharp surge in global freight rates.

Spot shipping rates for LPG have climbed to $160-$180 per tonne from the normal level of around $40. Similarly, crude transportation costs in the spot market have risen to $8-$10 per barrel, compared with $2-$2.50 under Indian Oil’s long-term charter arrangements.

Jain said the company was focusing on managing its existing chartered fleet, purchasing vessels and exploring domestic shipbuilding options. The refiner had earlier considered acquiring four medium-range vessels through an arrangement involving the Shipping Corporation of India and other state-run oil companies.

Indian Oil has also diversified its crude procurement amid disruptions to supplies through the Strait of Hormuz. During the first half of FY27, around 87 per cent of its crude purchases came from the spot market, compared with nearly 50 per cent in the previous financial year. Russian crude accounted for about 55 per cent of purchases during the period, while West Asian supplies declined to around 24 per cent.

The Indian crude basket, which averaged $65-$70 per barrel before the Iran war broke out in February, crossed $100 in March and averaged around $120 per barrel in October, Jain said.