Indian Refiners Pivot to Local Tankers Amid Hormuz Risks

Previously, firms avoided domestic tankers to minimize exposure to regional hostilities, preferring to pay premiums for delivery services handled by international energy majors. However, the February 28 strikes on Iran fundamentally altered the risk profile of Middle Eastern routes. Companies including Bharat Petroleum and HPCL-Mittal are now opting for free-on-board cargoes of Iraqi oil, effectively assuming responsibility for transport to bypass prohibitive service costs.

Iraq’s aggressive pricing strategy has provided a crucial incentive for this transition. State-owned SOMO is currently offering discounts of up to 37% against regional benchmarks for October cargoes, making the logistical gamble more palatable. This tactical adjustment coincides with a broader realignment of India’s energy imports. While Russia remains the country’s primary supplier at 1.75 million barrels per day, recent U.S. tariff threats have accelerated India’s return to Middle Eastern sources, which saw daily intake climb to 3 million barrels in September.