Whistleblower claims put the tanker rate behind India's crude bills under scrutiny

Two whistleblowing claims of attempted manipulation of TD3C, the Middle East Gulf to China supertanker rate, reached the Baltic Exchange after the Iran war began. They were made public in its London court case with Mercuria Energy Group, where hearings began this week¹.

Mercuria argues the Baltic should have suspended TD3C once traffic through the Strait of Hormuz collapsed. The Baltic says the claim is without merit and that it met its obligations⁴. Nothing has been proven. The Baltic's inquiry into the complaint naming Mercuria did not establish manipulation, and a second complaint, against an unnamed company, is still under investigation¹.

What the filings say, and what they do not

A whistleblower's email on 24 April said a deal circulated to brokers on 17 March at 350 Worldscale points was well below the published rate then, the Baltic's head of compliance said¹. Worldscale expresses freight as a percentage of a published flat rate⁵.

Mercuria's freight trader said TotalEnergies hired the Yasa Southern Cross from Mercuria, and that it loaded at Fujairah rather than inside the Gulf¹.

The Baltic's assessor that day said the agreement felt strange because it was privately negotiated and both companies held significant derivatives positions, its lawyers said¹. Two assessors later told its compliance head they felt Mercuria and another unnamed company "were trying to manipulate the market"¹.

Mercuria's lawyers said it "strongly and categorically rejects any allegation of wrongdoing" and called the claims irrelevant¹. Mercuria's freight trader said the company made almost daily offers to brokers from mid-April, cutting its rate from 400 Worldscale points to 300 by mid-June, below the Baltic's published 391 to 480¹. The Baltic's lawyer said those offers began days before Mercuria sued, and that lower rates would have helped its positions¹. The trader said the offers were purely commercial¹.

The benchmark rests on thin data

TD3C is published just after 4 p.m. London time as the average of nine brokers' assessments⁶. Baltic policy lets panellists use their "expert judgement of the wider market" when a route has little or no activity⁶. In its defence, the Baltic said one broker gave no assessment on 12 of 130 published days between early March and early September⁶. Last month, another broker said it would stop submitting on an indefinite but temporary basis⁶.

Bloomberg has reported that WhatsApp messages from Sinokor, the South Korean owner, have been a main driver of the price⁶. Brokers who used a Saudi Red Sea port for TD3C were told the rate must reflect loadings inside the Gulf⁶.

Traders increasingly watch TD34, the Baltic route from the Gulf of Oman to China, as open interest in TD3C derivatives has fallen⁶. The Baltic's weekly report of 25 October put TD3C at WS1,208.13, with earnings of $1,287,851 a day². TD34 was assessed at WS620, with earnings of $656,587 a day². "TD34 has by and large taken over from TD3C as a reliable benchmark," Fearnleys director Halvor Ellefsen said⁶.

Before the war, TD3C earnings were $218,000 a day. By 29 October they had reached $1.35 million¹. The Baltic's lawyers noted in court that flows through Hormuz have since recovered close to pre-war levels⁴. Vortexa, an analytics firm, said tanker freight looks to have peaked, at least in the short term⁷.

Mercuria has also complained to the Financial Conduct Authority about the benchmark, Bloomberg reported⁶.

What it means for Indian buyers

TD3C settles a large derivatives market and features in long term supertanker contracts, including for ships sailing elsewhere⁶.

Indian state refiners are also buying more crude on a delivered, or CIF, basis, where the seller covers transport. Equirus estimates almost all HPCL cargoes are now bought that way, against about half earlier^3, 8. That cuts exposure to freight spikes, but it hides the freight number: which index, and which date, set the freight inside the price.

IOC chairman A S Sahney said: "Today we are getting crude at discount but freight is eating that up. Freight is a killing factor"⁹. India's crude basket averaged $120.46 a barrel to 26 October, the highest in 14 years, as freight and insurance premiums rose³.

Buyers can still put protections in the paper. Ask for freight to be shown separately, even on delivered deals, with the index and assessment date named. Write a fallback for suspension, dispute or publication failure, naming a second index and a clear order of use. Keep audit rights over fixture data and a route to expert determination.

On free on board terms the refiner charters and pays freight itself, quoted in Worldscale points, so it holds the benchmark risk directly^8, 5. IOC had planned to take about 47% of its imports from Middle East producers on FOB terms this financial year¹⁰. It also plans a slight cut to Gulf crude under annual deals for 2027/28¹⁰. Clean product importers face the same question on the TC1 75kt Gulf to Japan route, assessed at WS1075 in the Baltic's 25 October report².

What to watch

Watch the judge's ruling on Mercuria's request to suspend TD3C retroactively, which the Baltic says would dissolve more than eight months of pricing⁶. Watch whether the FCA acts⁶. And watch whether TD34 gathers enough volume to become the contract default, leaving older TD3C-linked clauses to be renegotiated.