Indian refining companies are looking for tankers for hire to carry oil out of the Persian Gulf via the Strait of Hormuz, according to a Bloomberg report citing unnamed sources.
Two shipping companies have won tenders for Persian Gulf oil, the sources told Bloomberg, while another two submitted bids but their tenders were canceled.
Until now, Indian refiners steered clear of using Indian tankers to bring in crude oil from the Persian Gulf because of the heightened risk of attacks. This week just saw three tankers attacked in the Strait of Hormuz, according to the UK Maritime Trade Operations outlet.
Instead of Indian tankers, refiners used the services of Gulf state oil producers and international energy majors—and paid a handsome premium on the crude they received for these services. Freight and insurance costs for Middle East routes have skyrocketed in the wake of the February 28th U.S. and Israeli strikes on Iran that launched the war.
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It was probably cost considerations that pushed refiners including Indian Oil, Reliance, Bharat Petroleum, and HPCL-Mittal to switch to free-on-board cargoes of Iraqi oil, where the responsibility of arranging the transportation of the cargo falls on the buyer.
Iraq’s steep discounts likely helped motivate the decision to switch to local tankers, as the Hormuz-bound producer does not have viable alternatives to that route. Iraq’s SOMO is offering discounts of as much as 37% to Middle Eastern benchmarks on its crude for cargoes for October loading.
India has been buying more Middle Eastern oil recently, the latest estimates from Kpler showed earlier this week. For September, the average daily intake from Middle Eastern producers stood at 3 million barrels, the estimates showed, while imports of Russian crude declined after the United States threatened 100% tariffs on Indian imports if the country’s refiners continued to buy Russian oil. Russia remained India’s single largest oil supplier, however, with a daily rate of 1.75 million barrels last month.
By Irina Slav for Oilprice.com
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