Stories
Indian Refiners Hire Ships to Navigate Hormuz, Cut Costs, Secure Supply Chains
- •Indian oil refiners are now hiring tankers to transport crude through the Strait of Hormuz, a strategic shift aimed at reducing costs and bolstering supply chain security.
- •This new approach marks a departure from previous tactics where refiners relied on Gulf producers and international traders to manage the risks of transiting the contested waterway.
- •Companies like Indian Oil Corp., Reliance Industries Ltd., Bharat Petroleum Corp., and HPCL-Mittal Energy Ltd. are purchasing Iraqi crude on a free-on-board (FOB) basis, requiring them to handle shipping logistics.
- •The change in strategy follows a recovery in flows through Hormuz and the restoration of Saudi Arabia's East-West pipeline, with Middle East crude shipments nearing pre-war levels.
- •A softened advisory from the Directorate General of Shipping in August, allowing Indian seafarers to transit Hormuz with consent, facilitated this strategic shift for refiners.
Key Questions Answered
Indian oil refiners are hiring tankers to sail through the Strait of Hormuz to pick up crude directly from within the Persian Gulf, helping them cut costs and secure their supply chains. This marks a shift from relying on international traders to shoulder transit risks at a hefty premium.
Sinokor Group and Dynacom Tankers Management Ltd. have been awarded tenders by Indian processors to help transport crude oil through the Strait of Hormuz. Meanwhile, bids made by Shipping Corp. of India and Lila Global were canceled.
In August, the Directorate General of Shipping softened its advisory by asking shipowners and placement agencies to obtain the consent of Indian seafarers before transiting through the Strait of Hormuz, rather than maintaining a total ban.
