Hindustan Petroleum Company (HPCL), one of the largest state-owned refineries in India, is facing serious challenges in securing oil tankers for transporting cargo from the Strait of Hormuz. Vikas Kaushal, the company's president, stated in an interview in Abu Dhabi that the flow of oil from the Persian Gulf has increased to levels close to pre-war times, but buyers are still facing a shortage of vessels and last-minute decisions by ship owners to avoid risks in the Strait of Hormuz.
Challenges in Hiring Vessels
Kaushal said in the interview: "The main challenge has been hiring vessels. Even if we have crude oil to buy from the Persian Gulf, sometimes finding a ship for the available loading dates is difficult." He added: "Sometimes a ship is contracted, and then at the last moment, the owners say they cannot do it." Before the war, HPCL typically conducted its loadings from within the Gulf, but the shortage of vessels, wartime realities, and ship owners' reluctance to take risks on this route have forced the company to move to the spot market and arrange deliveries directly at its refineries.
Impact of Increased Oil Flows
The increase in oil flows from the Strait of Hormuz, primarily due to STS (ship-to-ship) transfers in the Gulf of Oman, has resulted in supertankers waiting for weeks for these transfers outside the strait. This situation has restricted access to Very Large Crude Carriers (VLCCs) for other key global oil trade routes. Additionally, inefficient oil loadings in the Middle East and the very tight supertanker market have created chain effects in the market for smaller vessels, including Aframax and Suezmax ships. The demand and daily rates for these vessels have also increased due to the shortage of supertankers.
Very high rates add millions of dollars to the cost of a crude oil shipment and further increase oil and fuel prices. This situation not only impacts the Indian oil market but could also affect global oil prices.
