EL7.AI
CommoditiesMedium•2 November 2026•
5 min read

Oil Shipping Costs to India Surge to $25 a Barrel, Squeezing Refiners

Key Facts

1Shipping crude from the Gulf to Indian ports cost $10–11 a barrel on October 29, compared with $1–1.5 before the war.
2Shipping a U.S. oil cargo to India cost about $20–25 a barrel when the report was published on October 29.
3Very large crude carrier rates from the Gulf to India’s west coast rose to $16 a barrel on October 19, excluding war-risk insurance.
4Natalia Katona estimated that freight costs are squeezing refining margins by about $10–15 a barrel.
5Shipping crude from the Middle East Gulf to Asia cost more than $37 a barrel by mid-October.

Oil transport costs to India have risen amid shipping disruption in the Gulf. Shipping crude from the Gulf region to Indian ports cost $10–11 a barrel when a report was published on October 29, compared with $1–1.5 before the war, according to a Reuters report cited by The Economic Times. Costs vary by cargo origin, route and tanker type; total freight costs facing refiners ranged from $10 to $20 a barrel, the report said. Shipping a U.S. oil cargo to India cost about $20–25 a barrel, compared with $3–3.5 before the war. The jump makes distant supplies less attractive than Gulf crude, as transport alone now adds a larger burden to the cost of bringing crude ashore. The figures show direct pressure on purchasing options and refining margins, amid a broad rise in tanker rates.

A Financial Express report published on October 19 recorded a rise in very large crude carrier rates from ports inside the Gulf to India’s west coast to $16 a barrel, excluding war-risk insurance, from $2.5 just before the war. On the shorter route from Oman and Fujairah to India’s west coast, rates reached $6–7 a barrel, compared with $2.6 in the first quarter of 2026 before the war. The comparison reflects differences in costs by loading point and distance, and does not make any one figure representative of all Indian imports. Across Asia-Pacific, freight rates for oil from the Gulf rose to $30 a barrel, compared with $6.30 just before the war and $2.5 in the third quarter of 2025. These levels underscore that shipping pressures have extended beyond routes to India, while the published figures remain tied to specific dates and routes.

The Financial Express cited commodities analyst Natalia Katona as estimating that freight costs are squeezing refining margins by about $10–15 a barrel compared with what product-price spread calculations suggest when based on crude prices alone. Katona estimated that crude from West Asia cost about $120 a barrel on arrival in India, while Dubai crude was trading near $110. The comparison shows how much transport costs can add to the benchmark price when calculating the cost of a barrel delivered to a refinery. Katona also said that 15–20% of the global very large crude carrier fleet was stranded in the Gulf and its vicinity. The report said ships were being used to carry crude to points for ship-to-ship transfers, waiting for other tankers, or taking longer routes; these factors are limiting tanker availability and raising cargo transport costs.

Hindustan Petroleum’s data show how high freight rates are affecting purchasing arrangements. The company’s chairman said it buys Middle Eastern crude on a delivered-to-port basis to avoid sending its own ships into the risk area. The company’s finance chief, Srividya Venkataraman, said freight rates doubled between July and September 2026 compared with the previous quarter. The cost of transporting crude on a Suezmax tanker also rose to about $9 a barrel, from $3–4 in the quarter ended in June, the company said. Cargoes bought on a delivered basis had previously accounted for about half of the company’s crude imports. The shift to delivered purchases shows how refiners can transfer some seaborne voyage risks to suppliers, while freight remains part of the cost of crude arriving at port.

In a broader picture of Asian crude costs, The Economic Times cited the International Energy Agency as saying that the cost of shipping crude from the Middle East Gulf to Asia on a large tanker exceeded $37 a barrel by mid-October, more than five times its prewar level. The report added that higher delivered crude costs pushed the margins of Asian refineries processing medium-sour crude into negative territory in September. On crude pricing, Saudi Arabia cut its November price for Arab Light crude to Asian buyers to $3–5 a barrel below the Oman-Dubai average, the widest discount since 2020, according to a report by The National. Qatar also cut its November prices by $3. The reductions come as refiners face high transport rates, with freight costs varying sharply by crude source and route.

In India, the industrial production index recorded annual growth of 6.7% in September 2026, after 8.0% in August, according to the quick estimate announced by the Ministry of Statistics and Programme Implementation on October 28. Manufacturing grew 7.6% in September, while electricity and gas supplies rose 11.2%, the ministry said. These data are separate from oil shipping costs, and the ministry does not link them to refinery margins or tanker rates. The ministry said quick estimates of the index are subject to revision in later releases under its revision policy. In its October outlook, the U.S. Energy Information Administration estimated an average Brent price of $105 a barrel in the fourth quarter of 2026, up $14 from its forecast the previous month. The agency said volatility in oil flows and prices is likely to persist as long as Middle East flow restrictions remain in place.