State-run Indian Oil Corporation Ltd (IOCL) has agreed to pay $47.75 million (around ₹458 crore) to charter the 12-year-old, Maltese-flagged VLCC Zourva for transporting crude oil from Mexico’s East Coast to Paradip, setting a new freight record for an Indian-bound crude shipment amid a sharp escalation in tanker rates.
The VLCC, owned by Athens-based Minerva Marine Inc., was fixed by IOCL on Wednesday for a single voyage. Shipping industry sources described the freight as an exceptionally high rate as disruptions in the Strait of Hormuz continue to constrain tanker availability and increase transportation costs.
The conflict involving Iran has severely disrupted traffic through the Strait of Hormuz, a critical energy corridor through which around 20% of global daily crude oil and liquefied natural gas supplies normally transit. Average vessel movements through the strait have fallen sharply to around 17 from approximately 125 before the conflict began on February 28.
The disruption has pushed up crude and tanker freight rates, vessel valuations, insurance costs and delivered crude prices, increasing the financial burden on major oil-importing countries such as India. The country imports around 85% of its crude oil requirements from overseas, leaving refiners including IOCL exposed to elevated international freight and crude costs.
The surge in freight rates has also highlighted concerns over India’s dependence on international shipping capacity. India’s annual freight bill is estimated to be approaching $100 billion, compared with around $75 billion a year earlier, underscoring the impact of volatile global shipping markets and limited national tonnage.
Shipping industry executives have called for Indian public sector oil companies to adopt longer-term chartering strategies during weaker freight markets to hedge against future rate spikes and encourage the expansion of Indian-owned tonnage.
The Hormuz disruption has also triggered a sharp increase in tanker asset values. A new-build 320,000-DWT VLCC currently costs around $120–130 million, depending on the shipyard, while a five-year-old 305,000-DWT VLCC was valued at $159.521 million on September 18. A 10-year-old VLCC of similar capacity was valued at $132.688 million, according to shipbroker data.
Values of very large gas carriers (VLGCs) have also climbed sharply, with a 10-year-old VLGC currently valued at around $105 million compared with approximately $75 million before the conflict.
The elevated freight and vessel prices are expected to remain a major cost pressure for crude and LPG importers until shipping traffic through the Strait of Hormuz normalises.