Indian refiners favor delivered crude in procurement shift as shipping costs mount
Indian state-run refiners are increasingly seeking crude on a delivered, or CIF, basis rather than on FOB terms, as geopolitical tensions drive sharp swings in freight and insurance costs, petroleum ministry officials and refiners said Oct. 26. Under CIF arrangements, sellers cover the cost and risk of transporting crude to the buyer’s destination. This allows ...
Indian state-run refiners are shifting towards procuring crude oil on a delivered, or CIF, basis instead of the traditional FOB terms. This change is driven by mounting shipping and insurance costs due to geopolitical tensions, particularly in the Gulf region. Under CIF arrangements, sellers assume the cost and risk of transporting crude to the buyer's destination, allowing Indian refiners to secure a more predictable landed cost and avoid sudden increases in freight rates.
A senior refinery official commented that they are increasingly buying crude on a delivered basis and not on FOB terms, as the seemingly attractive purchases could become uneconomical upon reaching the refinery due to high freight costs. Hindustan Petroleum Corp. Ltd. and Bharat Petroleum Corp. Ltd. are among the refiners adjusting their crude purchases based on delivered economics, despite high freight costs.
Russian crude purchases, in particular, are expected to increase for December delivery despite elevated freight costs. The trend reflects refiners' reluctance to maintain fixed term-contract and spot-market procurement ratios amid heightened uncertainty.
Written by urgent.news from Hellenic Shipping News's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
