Freight Costs Surge: Indian Refiners Face Squeeze on Crude Import Bill
The cost of getting crude oil onto ships and across the water has climbed sharply, significantly inflating Indian refiners’ crude costs. Freight now adds $10-15 per barrel to landed crude, according to Abu Dhabi-based commodity analyst Natalia Katona.
For Indian refiners, the price of crude is only part of the bill. The cost of getting it onto a ship and across the water has climbed so sharply that it is now eating into refining margins by an estimated $10-15 a barrel, and that is before war-risk insurance is counted on some Gulf routes. The squeeze comes as tanker rates surge across the Gulf, pushing the landed cost of West Asian crude in India to around $120 a barrel.
Route-by-Route Analysis Reveals Freight Cost Variations
The increase varies sharply by route, according to Katona’s estimates. For cargoes loaded at Oman and Fujairah in the UAE, freight on a very large crude carrier (VLCC) to India’s west coast is currently $6-7 a barrel, compared with $2.60 before the war in the first quarter of 2026. To the Asia-Pacific region, the rate has risen to $30 a barrel, from $6.30 immediately before the war and $2.50 in the third quarter of 2025.
Oil loaded at ports inside the Gulf and moving through the Strait of Hormuz has seen a steeper rise. Leaving out war-risk insurance, VLCC freight to India’s west coast has jumped to $16 a barrel, up from $2.50 immediately before the war and $1.20 in the third quarter of 2025. The matching Asia-Pacific rate is now $37 a barrel, against $6.60 before the war and $3 in the third quarter of 2025.
Global Tanker Fleet Tightens, Affecting Indian Buyers
Katona said Indian buyers are not at a disadvantage against their Chinese counterparts on these routes. “India is not paying higher freight rates than China on these routes,” she said, adding that the only exception would be barrels shipped from Russia’s Far East. The numbers on fleet availability help explain why. Of the 923 VLCCs in the global fleet, 766 are in active use. Around 124 Iranian VLCCs, roughly 13% of the fleet, remain effectively unavailable to much of the international market because of US sanctions.
Moving West Asian crude now takes an additional 15 VLCCs, 13 Suezmaxes and 10 Aframaxes compared with the 2025 average. Katona estimated that 15-20% of the global VLCC fleet is tied up in and around the Gulf, as vessels shuttle crude to ship-to-ship transfer points, wait for incoming tankers or take longer routes.
JP Morgan: Tanker Rates Doubled in September
A JP Morgan note, cited in the analysis, said freight rates on key West Asian crude routes and Atlantic deliveries doubled in September from levels that were already high in August. Shipping a VLCC cargo from West Asia to China has risen to around $35 a barrel from roughly $3 in early 2026, while the rate from the US Gulf Coast to China has reached $41 a barrel from $6.
“What began as a shortage of VLCC capacity in West Asia has therefore become a much broader tightening across the global tanker fleet,” JP Morgan said.
Original Article: Oil Freight Costs Surge: What It Means For India’s Refining Margins And Crude Import Bill — Abplive