Indian Oil Corporation is moving to acquire its own crude oil and liquefied petroleum gas carriers, as disruptions around the Strait of Hormuz and soaring freight costs push India's largest refiner to strengthen control over its energy supply chain . The company's board has already approved the purchase of a few vessels, and tenders were issued several months ago, Director of Finance Anuj Jain said during IOC's second-quarter earnings call on 7 November 2026 .
The strategic shift marks a potential departure from IOC's traditional reliance on a mix of time-charter and voyage-chartered vessels. Jain outlined three approaches the company is examining: optimising existing charter arrangements, owning ships outright, and supporting 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, adding that IOC was also exploring the possibility of building ships in India .
The cost differential that is driving the strategy is stark. IOC currently has three crude oil vessels and nine LPG vessels on time charter, and these arrangements have provided significant savings during the current crisis . Time-chartered crude carriers cost around $2–2.50 per barrel, compared with spot-market rates of as much as $8–10 per barrel . For LPG, freight rates that would normally be around $40 per tonne have risen to $160–180 per tonne in the spot market . These figures illustrate why ownership, or at least long-term control of tonnage, has become a priority: the gap between contracted and spot costs is not marginal but structural, and it represents a direct transfer of value from the refiner to the shipowner.
The timing of the move is inseparable from the broader shipping crisis. Geopolitical tensions in West Asia have disrupted commercial movement near the Strait of Hormuz, pushing up freight rates and war-risk insurance costs . Indian basket crude, which averaged around $65–70 per barrel in February, remained above $100 for much of the first quarter and averaged about $120 per barrel in October . In this environment, the cost of moving crude has become as volatile as the cost of the crude itself, and a refiner that cannot control its shipping arrangements is exposed to both commodity and freight risk simultaneously.
The vessel acquisition strategy is part of a wider effort to diversify crude procurement and reduce exposure to supply disruptions. IOC sourced 55% of its crude from Russia during the first half of FY27, with the Middle East accounting for 24%, Africa about 10%, Brazil 7%, the US 2–5%, and Venezuela 3–4% . Spot imports accounted for about 87% of crude sourcing in the first half, compared with around 50% in the previous financial year . The diversification gives IOC flexibility to respond to price movements and availability constraints, but it also means that its shipping requirements are spread across multiple routes and vessel types, increasing the complexity of managing freight exposure.
IOC's financial position provides the capacity to invest. The company reported a net profit of ₹21,630 crore in the September quarter, compared with a loss of ₹2,661 crore in the preceding quarter . It recorded a gross refining margin of $18.52 per barrel, excluding the impact of the special additional excise duty, and an inventory gain of ₹6,948 crore during the quarter . This earnings base gives IOC the balance-sheet strength to fund vessel acquisitions without straining its financial position, even as it continues to absorb under-recoveries on LPG sales that Jain said would rise to ₹370 per cylinder by December .
For India's energy security, IOC's move toward vessel ownership represents a structural response to a vulnerability that the Hormuz crisis has exposed. India imports the vast majority of its crude and a significant share of its LPG, and the country's refiners have historically relied on chartered tonnage arranged by suppliers or traders. When freight rates spike and vessel availability tightens, as they have during the current crisis, refiners without owned or long-term chartered capacity are exposed to market pricing. IOC's decision to acquire vessels is an attempt to reduce that exposure, and it may encourage other Indian oil companies to follow.
Looking ahead, the key milestones are the conclusion of the vessel purchase tenders, the delivery of the acquired ships, and the evaluation of domestic shipbuilding options. Jain cautioned that geopolitical developments remained a key source of uncertainty for the company, particularly because of their impact on crude procurement, freight, and marketing margins . The vessel acquisition strategy is therefore not a bet that the crisis will end soon, but a recognition that shipping risk is now a structural feature of India's energy supply chain, and that ownership provides a form of insurance against the volatility that has characterized the market in 2026.