NDTV Profit reported higher shipping bills for Indian refiners as Hormuz delays tie up tankers, while Bharat Petroleum Corporation Limited (BPCL) said freight costs contributed to its gross refining margin decline from the previous quarter.
NDTV Profit reported on Nov. 2, citing unnamed sources, that refiners’ shipping costs had reached $12 to $20 per barrel, against $8 to $10 in recent months. The Economic Times reported Oct. 29 that an industry executive put Gulf-to-India freight at $10 to $11 per barrel and U.S.-to-India rates at $20 to $25. Business Standard, citing two traders at Indian refiners, reported Oct. 31 that freight rates had eased to $20 to $30 from $30 to $40 in September. The figures cover different routes and periods.
Using Argus data, the International Energy Agency (IEA) put its Middle East Gulf-to-Asia rate for large tankers above $37 per barrel in mid-October, more than five times its prewar level. The agency linked higher costs to congestion near the Strait of Hormuz, rerouting and ship-to-ship transfers that lengthen journeys and reduce tanker fleet efficiency.
At an Oct. 26 earnings call, BPCL Director of Finance V.R.K. Gupta said increased freight costs, alongside reduced discounts on Russian crude, contributed to the company’s sequential margin decline. “The Q2 freight costs are very high,” Gupta said. BPCL reported a gross refining margin of $32.53 per barrel for July-September, compared with $10.78 a year earlier; the company said the figures exclude specified duties and cess. Hindustan Petroleum Corporation Limited reported a gross refining margin before export cess of $32.15 per barrel, up from $8.80 a year earlier.
Freight and insurance represented about one-quarter of a very large crude carrier cargo’s cost, compared with less than 5% before the war, Business Standard reported, citing two traders. The Economic Times said state-run refiners focused on domestic sales may face margin pressure because local fuel prices adjust slowly to global costs. Gupta said Persian Gulf crude was more commercially viable than Russian cargoes for November, partly because of higher freight. BPCL had not finalized all December cargo decisions at the time of the call.
