Indian Oil Refiners Hire Tankers To Ship Oil Via Hormuz To Cut Costs & Secure Supply Chains

Refiners in India are chartering tankers, instead of using their own, to procure oil from Middle East suppliers and bring it to the country’s ports through the risky waters of the Hormuz.

The new strategy comes as the number of ships passing through the strategic waterway increased in the last two months along with the reopening of Saudi’s East-West Pipeline.

Oil exports from the Gulf have reached 98% of the pre-war volumes, which is good news for all, sources familiar with the matter said.

India is also trying to reduce purchasing from Russian sellers, given the mounting U.S. pressure on New Delhi. Another difficulty was that India’s DG Shipping had banned companies from hiring Indian seafarers for Hormuz voyages, but recently the advisory was revised.

According to the latest notification, companies must get the consent of seafarers before they get on the vessel destined for a Gulf Port through the Strait of Hormuz.

Iraq, which is having trouble exporting its oil due to the ongoing conflict and lack of a merchant fleet, is also offering discounts on barrels of up to 37$ each, provided buyers get their own ships to export the cargo to the destinations.

Iraq’s government-owned company, SOMO, is offering lower prices far below the regional benchmarks for October contracts. India received an average of 1.3 million barrels of oil daily from the Gulf in September, which has been the highest recorded volume that has been imported from the region since February, when the US-Iran war began.

The new decision comes as refiners prepare to take risks to cut operational costs and secure supply chains. Tenders have been issued, and negotiations with shipping companies have begun. The Shipping Corporation of India and Lila Global made bids, but the tenders were cancelled. Till now, only Dynacom Tankers and Sinokor Group have received tenders.