The West Asia conflict has sharply increased tanker freight rates for crude oil shipments to India, with costs on some routes rising nearly fivefold since February, eroding the traditional shipping-cost advantage of sourcing oil from the Gulf.
According to Drewry Maritime Research, freight rates from Fujairah in the UAE to India’s west coast surged 377% to $7.51 per barrel in October, compared with $1.57 in late February. Rates also nearly doubled from $4.76 in September, driven by increased reliance on ship-to-ship transfers in the Gulf of Oman and disruptions to established shipping corridors.
Freight costs for Russian crude shipments from the Baltic Sea ports of Primorsk and Ust-Luga to India’s west coast have also climbed sharply, from $8-12 per barrel before the conflict to around $25-30 or more in October.
The disruption to shipping through the Strait of Hormuz, heightened war-risk insurance premiums and reduced tanker availability have pushed up transportation costs across global oil trade. Diversions around the Cape of Good Hope add 3,500-4,000 nautical miles and 10-14 sailing days, further increasing fuel consumption and reducing effective vessel capacity.
The impact extends beyond crude imports to India’s refined petroleum exports and gas supplies. Higher freight rates and longer voyages are raising the delivered cost of Indian diesel in Europe, while alternative LNG and LPG shipments from the US are also becoming more expensive due to longer routes and increased demand for specialised carriers.
India’s crude imports reached an estimated record 5.6 million barrels per day in October, with Russian supplies accounting for around 35% of the total.
Drewry expects freight rates to ease if normal commercial shipping through the Strait of Hormuz resumes in 2027, supported by the return of vessels to Gulf trade and declining war-risk premiums. However, prolonged geopolitical tensions could keep transportation costs elevated, increasing India’s crude import bill and refiners’ working capital requirements.