Iran war: IOC to buy crude, LPG carriers as Strait of Hormuz disruptions drive freight costs
Mint - Economy · Published 8 November 2026 · Last updated
IOC’s move to buy its own crude and LPG carriers aims to hedge against Hormuz‑related freight spikes and secure India’s oil supply chain.
Key points
- Indian Oil Corporation (IOC) approved the purchase of crude and LPG carriers during its Q2 2026 earnings call, citing Strait of Hormuz disruptions.
- Finance Director Anuj Jain said tenders for the vessels were issued several months ago and the board has already approved the acquisition.
- IOC currently charters three crude and nine LPG vessels, paying USD 2‑2.5 per barrel for crude carriers versus spot rates of USD 8‑10 per barrel.
- LPG freight rates have surged from a normal USD 40 per tonne to USD 160‑180 per tonne in the spot market.
- The company is exploring Make in India shipbuilding to domestically produce vessels, reducing reliance on foreign shipyards.
- IOC sourced 55 % of its crude from Russia and 24 % from the Middle East in H1 FY27, prompting diversification.
- Spot crude purchases rose to 87 % of total imports in H1 FY27, up from ≈50 % the previous year.
- IOC reported a net profit of ₹21,630 crore in the September quarter, reversing a ₹2,661 crore loss a year earlier.
Background
- Geopolitical tensions in West Asia escalated after US‑Iran hostilities in February 2026, disrupting commercial traffic near the Strait of Hormuz.
- Freight and war‑risk insurance costs have more than doubled since early 2026, pressuring Indian oil importers.
- India’s dependence on imported crude (≈80 % of consumption) has historically made shipping bottlenecks a strategic risk.
- The Make in India initiative, launched in 2014, encourages domestic manufacturing of capital goods, including ships.
- Earlier, IOC relied on a mix of time‑charter and voyage‑charter vessels, a model that proved costly during the 2026 freight surge.
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Original report: Mint - Economy