State-run Indian Oil Corporation will buy its own crude and liquefied petroleum gas carriers to insulate fuel lifelines as escalating West Asian maritime hostilities push global shipping rates to punitive highs.
IOC's board cleared the fleet acquisitions after spot charter rates for liquefied petroleum gas (LPG) quadrupled from roughly $40 a tonne to between $160 and $180 a tonne. Crude oil transport followed the same punishing trajectory. Moving a barrel of crude under spot contracts leaped to $8–$10, up from the $2–$2.50 IOC pays under existing time charters. The state refiner issued tenders several months ago to secure dedicated tonnage, Director of Finance Anuj Jain confirmed during the company's second-quarter earnings briefing.
Jain made the strategic rationale plain. "The country needs oil sector companies to focus more on the shipping area now," he said, noting that IOC is actively examining domestic vessel construction under the Union government's Make in India initiative.
Trouble along the Strait of Hormuz forced the pivot. Escalating military clashes across the Persian Gulf have trapped commercial shipping in a web of spiking war-risk premiums and rerouted passages. IOC manages three crude tankers and nine LPG vessels on long-term time charters—buffers that blunted the worst blows of the autumn rate spikes. But those leases cannot cover the company's entire import bill.
To hedge against Middle East chokepoints, the refiner radically redrew its crude map. Russian barrels accounted for 55% of IOC's total crude intake in the first half of the financial year. Middle Eastern suppliers provided 24%, while African producers supplied 10%. Brazil shipped 7%, the United States delivered 2% to 5%, and Venezuela accounted for 3% to 4%.
Spot purchases made up 87% of crude sourcing in the first half of the year, compared to 50% in the preceding fiscal period. IOC wrung out discounts between $5 below benchmark and premiums of $12 above benchmark during the September quarter, even as Indian basket crude surged past $100 and touched $120 a barrel in October.
| Sourcing Region | Share of H1 Crude Supplies | Spot vs Charter Cost Benchmark |
|---|---|---|
| Russia | 55% | Spot Crude: $8.00–$10.00 / bbl |
| Middle East | 24% | Charter Crude: $2.00–$2.50 / bbl |
| Africa | 10% | Spot LPG: $160–$180 / tonne |
| Brazil & Americas | 11%–16% | Charter LPG: ~$40 / tonne |
Operational discipline protected the bottom line. IOC posted a net profit of ₹21,630 crore for the September quarter, recovering sharply from a ₹2,661 crore loss in the preceding three-month period. Massive inventory gains of ₹6,948 crore and a gross refining margin of $18.52 per barrel anchored the turnaround. To guard against sudden supply cuts, the company expanded crude inventories to 39 days of consumption, well above its operational baseline of 33 to 35 days. Petrol and diesel stockpiles stand at 25 days, with LPG reserves at 20 days.
IOC's technical teams are now evaluating tender responses while assessing yard availability across domestic shipbuilders to finalize long-term keel allocations.