Indian Oil Corporation (IOC), India's largest oil refiner, plans to buy ships of its own for importing crude oil and liquefied petroleum gas (LPG) to build a more reliable supply chain and reduce disruption from geopolitical uncertainties such as the West Asia conflict, IANS reported on Sunday.

Source: IANS via hi INDiA

Director (Finance) Anuj Jain said during the company's earnings call that the board has approved the purchase of a few vessels and tenders were issued some months ago, The Hindu BusinessLine reported. IOC is examining three approaches: managing its existing chartered fleet, purchasing vessels, and exploring options to build ships in India under the government's Make in India policy.

Why freight costs forced the move

IOC currently has three crude oil tankers and nine LPG carriers on time charter. Jain said the company pays around $2–$2.50 per barrel to move crude under its long-term charter arrangements, while spot market rates have surged to $8–$10 per barrel. LPG spot freight has risen to around $160–$180 per tonne from normal levels of about $40 per tonne, amid attacks on merchant ships passing through the Strait of Hormuz, through which about 20 per cent of the world's energy exports transit in normal times.

$8–10Spot crude freight per barrel
$2–2.50IOC charter cost per barrel
$160–180Spot LPG freight per tonne
12Vessels now on time charter (3 crude + 9 LPG)

The refiner had earlier explored acquiring four medium-range vessels through an arrangement involving the Shipping Corporation of India and other state-run oil companies. Long-term shipping contracts have cushioned IOC from the sharpest rate hikes, but officials said the Red Sea situation, with Houthi control of coastal areas in Yemen, has made the risk worse.

Sourcing shift alongside the shipping plan

IOC has also diversified crude imports amid the Hormuz disruption, sourcing more outside West Asia from Russia, Venezuela, Brazil and Africa. In the first half of FY27, about 87 per cent of its crude purchases were in the spot market, compared with about 50 per cent in the previous financial year; Russian crude accounted for around 55 per cent, while West Asian supplies fell to around 24 per cent, Jain said. The Indian crude basket, which averaged $65–70 a barrel before February, averaged about $120 a barrel in October.