Indian Refiners Seek Tankers for Hormuz Oil

Indian refining companies are reaching out for chartered tankers to transport oil out of the Persian Gulf through the Strait of Hormuz, a Bloomberg report cites unnamed sources. Two shipping firms have secured contracts for Persian Gulf oil, while two others withdrew their bids. Previously, Indian refiners avoided using Indian tankers to import crude oil from the Persian Gulf due to the elevated risk of attacks.

In the last week, three tankers were targeted in the Strait of Hormuz, according to the UK Maritime Trade Operations outlet. Refiners often utilized Gulf state oil producers and global energy giants, paying a significant premium for the crude they acquired. The surge in freight and insurance costs for Middle East routes since the February 28th U.S. and Israeli strikes on Iran has prompted this change.

Indian Oil, Reliance, Bharat Petroleum, and HPCL-Mittal are among the refiners that made this switch. Indian refineries opted for free-on-board cargoes of Iraqi oil, where the buyer assumes the responsibility of transporting the cargo. Iraq's substantial discounts may have influenced the decision to use local tankers, as the Strait of Hormuz is the most viable route for cargo transportation to Iran.

SOMO, Iraq's oil and condensate exporter, is offering discounts of up to 37% on its crude for September loading. India has been increasing its Middle Eastern oil purchases recently, with September's average daily intake from Middle Eastern producers reaching 3 million barrels, while Russian crude imports dropped following the U.S.'s threats of 100% tariffs on Indian imports if the country continues buying Russian oil. However, Russia remains India's largest oil supplier, with a daily rate of 1.75 million barrels.