Indian Oil Corporation (IOC) plans to acquire crude oil and liquefied petroleum gas (LPG) carriers as shipping disruptions around the Strait of Hormuz have driven freight costs to $10 per barrel. The company's board approved the purchase amid rising geopolitical tensions, according to a statement on November 8, 2026.
Key Details
The move aims to strengthen IOC's control over its energy supply chain. Director of Finance Anuj Jain noted during a recent earnings call that the company is also exploring domestic shipbuilding under the government's Make in India initiative. "The country needs oil sector companies to focus more on the shipping area now," Jain said. IOC's new strategy may shift from relying on time-chartered and voyage-chartered vessels to owning its own ships.
Background
Freight rates have surged significantly due to the ongoing tensions. IOC's time-chartered crude carriers cost around $2 to $2.50 per barrel, while spot-market rates have reached as high as $8 to $10 per barrel. LPG freight rates have also increased from a typical $40 per tonne to between $160 and $180 per tonne in the spot market. This shipping strategy is part of IOC's broader effort to diversify crude procurement and mitigate exposure to supply disruptions. In the first half of the current financial year, IOC sourced 55% of its crude from Russia, with Middle Eastern supplies accounting for 24% and Africa contributing about 10%.
The rising freight costs are likely to affect oil prices, especially for crude and LPG, as companies adjust to higher shipping expenses. Investors will watch for further developments in the Strait of Hormuz, which could influence global oil supply dynamics.
Based on reporting by: moneycontrol.com, livemint.com