Freight discounts prompt India's HPCL to buy oil on delivered basis

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Attacks on vessels transiting the Strait of Hormuz have also tightened shipping availability and driven freight rates close to record highs

By Reuters

Updated - October 23, 2026 at 03:29 PM. | NEW DELHI

Hindustan Petroleum Corp is increasingly buying Middle Eastern crude ​on a delivered basis. | Photo Credit: PRIYANSHU SINGH

India's state-run Hindustan Petroleum Corp is increasingly buying Middle Eastern crude ​on a delivered basis, as producers with stranded cargoes offer ‌discounts to offset higher freight costs, its ​chair said on Friday.

The refiner directly operates ⁠three refineries with a combined capacity of 670,000 barrels per day.

"For all practical purposes right now almost everything ‌we are looking at is on landed basis except where we think we can send ‌a ship and pick it up cheaper," ‌said ⁠Vikas Kaushal on an analyst call after HPCL's ⁠September-quarter earnings.

Supply disruptions from the Middle East, as the Iran war enters its eighth month, have pushed Asian refiners to ​buy spot Middle Eastern oil ‌on a delivered basis.

Attacks on vessels transiting the Strait of Hormuz have also tightened shipping availability and driven freight rates close to record highs.

Freight ‌rates doubled in July to September from ​the previous quarter, HPCL finance chief Srividya Venkataraman said.

The cost of shipping crude on ⁠a Suezmax tanker has risen to about $9 per barrel from $3 to $4 in the June quarter, she said.

"The ‌impact on landed prices might not be as much as you guys think from outside because the producers of oil are also stuck," Kaushal said, adding that returns to producers with stranded cargoes were much lower than publicly reported.

He said delivered ‌cargoes previously accounted for about half of HPCL's crude imports. The ​company is increasingly opting for delivered cargoes to avoid exposing its own vessels to attacks ⁠and other risks linked to the regional conflict.

Kaushal also ⁠said HPCL expects to start producing high-sulphur fuel oil at its 180,000-bpd Rajasthan refinery ‌in December. The refinery is operating at 60 per cent capacity and is expected to reach full capacity by ​end-December or early January, he said.

Published on October 23, 2026

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