IOC Chief Says India’s Freight Bill Is Swallowing Its Cheap Crude Discount

India needs to build up its own shipping capacity or watch freight costs consume the benefit of discounted crude purchases, Indian Oil Corporation chairman A S Sahney said, in a blunt admission that the country’s tanker fleet has not kept pace with its refining ambitions.

“We have been neglecting shipping… we have to build our capabilities in shipping. Today we are getting crude at a discount but freight is eating that up. Freight is a killing factor,” Sahney said on a panel at the Energy Technology and Innovation Meet in Goa on Tuesday.

His remarks put a number-free but unambiguous price on a structural weakness: India buys crude on favourable terms in a disrupted market, then pays much of that advantage back to shipowners in charter hire.

The timing of Sahney’s comment is not incidental. Freight rates for Russian oil exports from western ports to India hit record highs in early October, driven by heightened security risk in the Black Sea and a broad rally in tanker fees globally.

This story was originally published by Maritime Gateway. Read the full story at Maritime Gateway →