Archive · 25 Aug 2026
Hormuz Disruption Drives India’s Crude Freight Costs Sharply Higher
India buys much of its oil from other countries.
Fighting and disruptions around the Strait of Hormuz have made it more expensive to transport that oil.
Shipping costs on important routes to India have risen sharply.
Insurance for ships crossing the strait has also become dramatically more expensive.
This has pushed India’s oil import bill higher even though the country bought only slightly more oil.
Indian government-owned refiners also lost money in the latest quarter.
The strait briefly reopened after a ceasefire, but shipping costs rose again when the ceasefire broke down.
Analysts expect shipping traffic to stay limited for several more months.
Alternative routes may help, but they can require extra ship journeys and keep costs elevated.
Freight rates on major crude routes to India rose 137%-411% between late February and August.
War-risk insurance for one Strait of Hormuz voyage increased from about $250,000 to as much as $7.5-$10 million.
India’s April-July FY27 crude import bill rose 56.5% year-on-year to $63.4 billion, while import volumes increased only 0.5%.
IndianOil, Bharat Petroleum and Hindustan Petroleum posted combined June-quarter losses of ₹18,149 crore.
Rystad Energy expects constrained Hormuz traffic for another two to three months, with alternative routes gaining importance.
- Who
- India, its oil importers and domestic refiners, including IndianOil, Bharat Petroleum and Hindustan Petroleum, are affected; Rystad Energy analyst Erik Grundt provided the market assessment.
- What
- Crude freight rates and war-risk insurance costs have surged, increasing India’s landed oil costs and pressuring refinery finances.
- When
- Freight rates are compared between late February and August; import and refinery figures cover April-July FY27 and the June quarter, respectively.
- Where
- The disruption centers on the Strait of Hormuz and affects crude routes from Saudi Arabia, the United States and Russia to India.
- Why
- The Iran war, constrained Strait of Hormuz traffic, vessel rerouting and a tight tanker market have reduced available shipping capacity and increased risk premiums.
- Ras Tanura-India freight
- Rose 411% to an estimated $4.34 per barrel in August from $0.85 in late February.
- United States-India freight
- Corpus Christi freight rose 150% to $15.86 per barrel from $6.35.
- Russia-India freight
- Ust-Luga freight on Suezmax tankers rose 137% to $19.90 per barrel from $8.40.
- War-risk insurance
- Increased from roughly 0.25% of hull value before the war to a reported 7%-10%, or about $7.5-$10 million per voyage.
- India’s crude import bill
- Reached $63.4 billion during April-July FY27, up 56.5% year-on-year.
- Average landed crude price
- Rose to about $106 per barrel from $68 a year earlier.
- Refiner performance
- IndianOil, Bharat Petroleum and Hindustan Petroleum recorded combined net losses of ₹18,149 crore in the June quarter.