Indian Oil Corporation's board has approved the purchase of crude oil and LPG carriers, director of finance Anuj Jain said on the company's September-quarter earnings call. Tenders for the vessels were issued several months ago1, 2.
The state refiner, India's largest, is shifting part of its shipping from chartering to ownership because of the cost gap. Its time-chartered crude carriers cost about $2-2.50 a barrel, against as much as $8-10 a barrel in the spot market, Jain said1, 2. LPG freight, normally around $40 a tonne, has reached $160-180 a tonne in the spot market1, 2.
IOC currently has three crude oil vessels and nine LPG vessels on time charter. Those contracts have delivered significant savings during the current crisis, Jain said1, 2.
"The country needs oil sector companies to focus more on the shipping area now," he said1.
A spot-heavy buyer with long supply lines
IOC bought about 87% of its crude on the spot market in the first half of the financial year, up from around 50% in the previous year, Jain said1, 2. Russia supplied 55% of its crude, the Middle East 24%, Africa about 10%, Brazil 7%, the United States 2-5% and Venezuela 3-4%1.
The company raised crude inventories to about 39 days from its usual 33-35 days, and held 20 days of LPG1. It reported a net profit of Rs 21,630 crore for the September quarter1.
War-risk insurance is part of the freight bill. IOC cited rising war-risk costs among the reasons shipping capacity has become harder to secure1. Shipowner Dorian LPG, which runs very large gas carriers, said LPG freight in the third quarter was supported by higher war-risk insurance premiums. It also cited higher bunker prices and continued reluctance among owners to re-enter the Persian Gulf4.
The Baltic Exchange Liquid Petroleum Gas Index, which tracks the benchmark Ras Tanura to Chiba route, averaged $228.915 a tonne in the third quarter, against $81.320 a year earlier, Dorian said4.
Thinner tonnage for buyers without ships
Other Indian refiners are finding ships harder to secure. Hindustan Petroleum chairman Vikas Kaushal said in an interview in Abu Dhabi that hiring vessels is the main challenge, and that an owner sometimes withdraws after agreeing to a voyage3.
"Even if we have crude available for purchase from the Persian Gulf, sometimes finding vessels for the available loading dates is a challenge," Kaushal said3.
HPCL bought about 240,000 barrels a day of Middle East crude in 2025, according to Kpler data. That fell to 57,000 barrels a day in April as the war disrupted Hormuz, and recovered to 256,000 barrels a day on average in October3.
Refiners are also pushing freight risk onto sellers. Indian state refiners are increasingly buying crude on a delivered, or CIF, basis, where the seller covers the cost and risk of transport, rather than on free-on-board terms5. Mangalore Refinery and Petrochemicals said it will insist on delivered-at-port cargoes to de-risk, and hopes Middle East producers will offer them under annual deals6.
Shipbuilding is the slower answer
Jain said IOC was also exploring building ships in India under the government's Make in India programme1, 2. The company is weighing three routes: optimising existing charter arrangements, owning ships and supporting domestic shipbuilding1.
Domestic yards cannot close the gap quickly. India accounted for 0.075% of global merchant ship deliveries in 2025, delivering 57,637 gross tonnes against 77.28 million tonnes worldwide, according to a report by FICCI and EY7. India would need roughly an 11-fold increase in output to match Vietnam, the fifth-ranked shipbuilding nation7.