India's refiners redraw crude and LNG deals around Hormuz risk

India's Mangalore Refinery and Petrochemicals will keep buying crude on a delivered basis, its finance chief said on 4 November. It hopes Middle East producers will offer delivered cargoes inside annual term deals, extending a shift Indian refiners began this year¹.

Devendra Kumar told an analyst meeting that MRPL would continue to insist on delivered-at-port, or DAP, cargoes to cut its shipping exposure to the Iran war, The Economic Times reported. Under those agreements the supplier is responsible for delivering the cargo to its destination¹.

The comment matters because annual crude deals in Asia have usually been free on board, with the buyer arranging the ship¹. Kumar said he expects producers to keep offering the new variations. "Our estimate is going forward that some form of these variations which are being brought in now (by the producers) would be available in future also," he said¹.

MRPL runs a 300,000 barrels per day refinery in Karnataka. It took about a fifth of its crude from the Middle East and around a third from Russia in the September quarter¹.

Why delivered buying is spreading

Freight is the trigger. Goldman Sachs attributed more than half of the $20 a barrel year-on-year rise in the global average crude freight rate to Hormuz war risk and ship-to-ship transfers. It put the war risk premium at $7 a barrel².

The International Energy Agency put the cost of moving crude from the Middle East Gulf to Asia above $37 a barrel, more than five times prewar levels. For a two-million-barrel VLCC that is more than $74 million a cargo, against less than $15 million before the conflict⁵.

Other routes are expensive too. Platts assessed Dirty Black Sea to West Coast India freight at a lumpsum of $28 million on 30 October, nearly double the year-to-date average of $14.5 million⁴.

Producers have adjusted. Middle Eastern sellers are offering more crude through ship-to-ship transfers outside Hormuz and offering freight discounts on delivered supplies¹. Some are selling crude delivered and absorbing part of the higher freight to attract buyers, The Economic Times reported, citing a source⁶.

The volumes show why. Indian refiners imported a record 5.54 million b/d of crude in October, above the previous high of 5.50 million b/d in March 2025⁴. Domestic-bound imports rose 9% from September and from a year earlier. Total seaborne discharges, which include ship-to-ship volumes later redistributed to other markets, rose 19% month on month to 6.4 million b/d⁴.

What "delivered" actually transfers

The word delivered covers two different risk splits.

Under CIF, the seller pays freight and insurance to the destination port, but risk passes to the buyer when the goods are loaded on the ship. The seller must insure for 110% of the contract value⁷. Under DAP, risk passes at the named destination, the seller pays carriage to that point, and the buyer handles import clearance, duties and unloading⁷.

So a contract that says delivered but uses CIF leaves transit risk with the buyer, while DAP moves it to the seller⁷. MRPL said it will insist on DAP¹. Buyers who want the seller to carry Hormuz risk need the second version, with war risk cover named in the contract.

LNG moves the risk from Hormuz to the US Gulf

Petronet LNG is testing a different lever: where the molecules come from. Its 7.5 million tonnes a year contract with Qatar expires in April 2028 and has been renewed for 20 years to 2048, with Qatar supplying on a delivered basis³.

Group general manager Vivek Mittal said on 3 November that Petronet had discussed sourcing part of the renewed volumes from the United States from 2028. Qatar was willing to consider offering "certain portion of volume from other sources which they have tied up", he said³. No agreement has been announced³.

Qatar has no LNG export route that avoids Hormuz. Its cargoes leave from Ras Laffan, where an Iranian missile damaged two of 14 trains in March, removing about 17% of export capability. QatarEnergy said repairs would take around three years and lose roughly $20 billion a year in revenue⁸.

QatarEnergy is buying US supply instead, including 3 million tonnes a year for 20 years from Woodside's Louisiana facilities and up to 4 million tonnes a year from Cheniere through 2054⁸. Deliveries under those contracts begin in 2030 and 2031⁸, after the 2028 start Petronet is discussing³.

India's LNG buying has already moved. Qatar supplied 3% of India's LNG in March to September, against 45% a year earlier, while the US, Oman and Nigeria supplied about 68%⁹. More than a third of India's LNG now comes from the spot market, where the Japan Korea Marker is around $30 per mmbtu. Crude-linked term supply would typically cost around $14 per mmbtu at the Brent price of $110 a barrel used in that comparison⁹.

Term, spot and what is not public

Term crude is no longer the default. Indian Oil had planned to take about 47% of its crude from Middle East producers under annual deals on FOB terms in the year to March 2027. A source said it will slightly cut those volumes in 2027/28⁶. HPCL's chairman said the refiner no longer relies on a 50-50 split between term and spot purchases¹⁰. BPCL, by contrast, plans to raise Russian crude purchases for December delivery despite high freight¹⁰.

Shipping commitments are the other side of the trade. Three LNG carriers chartered to bring Qatari gas to Petronet have been largely idle since 2 March, and their owners are seeking Rs 625 crore plus taxes in arbitration. Petronet is contesting the claims¹¹. The company has suspended time charter agreements for three LNG tankers because of the force majeure on Qatari supplies³.

What is not public is the delivered-versus-FOB gap. Refiners do not publish the premium they pay to hand over shipping and war risk. Officials describe the process only as comparing delivered offers from suppliers worldwide and picking the lowest landed cost¹⁰. Kumar said MRPL would judge cargoes on delivered economics once the market stabilises¹.

Watch three things:

• the 2027/28 annual deal round, where Indian Oil is trimming Gulf volumes and MRPL wants delivered terms^6, 1
• whether Petronet and Qatar turn the US sourcing discussion into contract terms before 2028³
• war risk pricing. Brent January futures were $104.20 a barrel on 4 November¹², and the $7 a barrel Hormuz premium will move with the attacks²