Indian Oil Corporation, the state-owned company that is the largest oil refiner in India, plans to buy crude oil tankers and liquefied petroleum gas carriers of its own. Disruptions to shipping near the Strait of Hormuz and higher freight costs are pushing the company to take more control of its energy supply chain, The Hindu BusinessLine reported.
Director of Finance Anuj Jain said during the company’s second-quarter earnings call that its board has approved buying a few vessels and that tenders went out several months ago. “The country needs oil sector companies to focus more on the shipping area now,” Jain said. He added that the company is also looking at building ships in India under the government’s Make in India program.
Until now the company has relied on a mix of ships hired for a set period and ships hired for single voyages. It now weighs three approaches: improving its charter arrangements, owning ships and supporting shipbuilding in India. It charters three crude oil tankers and nine gas carriers for set periods, and Jain said those contracts have produced significant cost savings during the crisis.
The gap is wide. The company pays $2 to $2.50 a barrel to move crude on its set-period tankers, against spot-market rates of as much as $8 to $10. Freight for gas that would normally cost $40 a metric ton now runs $160 to $180 a metric ton on the spot market, Jain said.
Spot purchases have become the company’s main way to buy crude. They made up 87% of its crude sourcing in the first half of the fiscal year ending March 2027, up from 50% a year earlier. Indian basket crude averaged $65 to $70 a barrel in February, stayed above $100 for much of the first quarter and averaged $120 in October, Jain said.
The company kept its refineries running at optimal levels and raised its crude inventories to 39 days, from its usual 33 to 35 days. It reported a net profit of $2.3 billion at current exchange rates for the quarter ended September 30, 2026, which it said came from inventory gains and better results across several businesses.
Jain cautioned that geopolitical developments remain a key source of uncertainty for crude buying, freight and marketing margins.
