Tanker rates to India have more than doubled in about two weeks as attacks and disruption around the Red Sea and Strait of Hormuz raise the cost and risk of moving oil to the world’s third-largest oil importer. The increase is not only a shipping-market shock. It exposes how dependent India’s fuel economy is on a small number of maritime corridors, and how quickly a geopolitical crisis can reach import bills, inflation and growth.
Daily charter hire rates for tankers travelling to India have risen to about $250,000, from approximately $100,000, according to the report. Bunker fuel prices have increased by 50% to $900 a tonne, while insurance costs have risen by 20%. Each cost is linked to the same underlying problem: vessels face greater danger, longer routes and fewer available options for carrying energy through the region.
The immediate trigger is the escalation around Yemen’s Mocha port and the Bab el-Mandeb Strait. Houthi forces seized control of Mocha last week and advanced towards the strategically located Perim, or Mayun, Island, according to Reuters and other reports cited in the source material. The development threatens shipping through the Red Sea chokepoint. At the same time, traffic through the Strait of Hormuz remains severely disrupted.
These two waterways perform different but connected functions in the energy system. Bab el-Mandeb links the Red Sea with the Gulf of Aden and is a key passage for vessels moving between the Indian Ocean and the Suez Canal. Hormuz is the principal maritime outlet for oil and gas from the Gulf. Disruption in either corridor can force shipping companies to reassess routes, insurance cover, vessel availability and delivery schedules. Disruption in both places narrows the system’s ability to absorb delay.
Anil Devli, chief executive of the Indian National Shipowners’ Association, said the situation had “completely reversed” over the previous week. He said seafarers were now worried about taking the Hormuz route because ships were being attacked and sunk and seafarers killed, whereas earlier vessels were mostly disabled or prevented from moving.
The shipping response is already visible in the freight market. Devli said tanker rates had eased to around $70,000-80,000 a day about two months earlier. Their subsequent rise to $250,000 represents a sharp increase in the cost of securing transport capacity. For refiners and importers, freight is only one component of the final landed cost of crude, but the movement indicates how quickly risk premiums can overwhelm normal commercial calculations.
A further deterioration around Bab el-Mandeb could force tankers carrying Saudi Arabian oil to use the Suez Canal route, adding about two weeks to the voyage, according to shipping industry executives cited in the report. A longer voyage requires more vessel time, fuel and crew deployment. It can also reduce the number of tankers available for other journeys, creating additional pressure on freight rates even when the volume of oil being purchased has not changed.
The resulting pressure is significant for India because West Asia accounts for about 30% of the country’s current oil and gas imports. The report says Brent crude was near $105 a barrel, around a four-month high, while the Indian crude basket was recorded at $115.98 a barrel on September 9. The figures show that India is facing two simultaneous increases: the price of the commodity itself and the cost of moving and insuring it.
The fiscal effect can be substantial. The report states that every $1 increase in crude oil prices raises India’s annual import bill by ₹18,000 crore. India’s crude import bill for April-July of the current fiscal year had already reached $63.37 billion, up 56% from a year earlier. That compares with a total oil import bill of $123 billion in the previous fiscal year.
These numbers explain why an overseas shipping crisis becomes a domestic economic concern. Higher crude prices increase the value of imports and put pressure on the trade balance. Higher freight and insurance costs add to the landed price before crude reaches Indian refineries. The effect can then move through transport, industrial production, logistics and household consumption, although the precise pass-through to retail prices depends on policy and market conditions.
The report also records a rise in India’s retail inflation to a 19-month high of 4.45% in July. It does not establish that the maritime disruption alone caused that increase. It does, however, place the shipping shock in an economy where price pressures are already relevant to households and businesses. The central issue is therefore not only whether vessels continue to move, but how much additional cost the supply chain can absorb before it reaches consumers and producers.
The disruption also complicates the geography of crude sourcing. An executive with a refiner said uncertainty in West Asia threatened to halt the revival of supplies, while Russian crude was in some instances being sold at a premium. A UAE-based logistics executive said movement through Hormuz was very limited and that the vessels still operating were paying high war-risk premiums on top of already elevated levels.
The reference to Russian crude is important because it shows that diversification is not simply a matter of finding another supplier. Alternative cargoes may face their own premiums, sanctions-related constraints, longer routes or limited availability. A country can diversify the origin of crude and still remain exposed to the shipping infrastructure required to bring that crude home.
India’s response has included an insurance mechanism. The Centre launched the Bharat Maritime Insurance Pool in May, with a facility of $1.5 billion and a sovereign guarantee of $1.4 billion, to support continuous maritime insurance coverage. Such a pool is designed to keep commercial shipping possible when private insurers become reluctant to cover high-risk routes.
Its reported relevance is limited by the present operating reality. An executive with an Indian shipping company said Indian vessels were not currently using the affected routes and therefore were not using the insurance support. The mechanism may provide capacity when vessels need to move, but it does not remove the underlying security risk, shorten a diverted voyage or guarantee that shipowners and crews will accept a route.
This distinction matters for public policy. Maritime insurance can address one part of the logistics chain, but energy security also depends on strategic reserves, refinery flexibility, port capacity, diplomatic access, shipping ownership and the ability to source cargoes from different regions. The supplied material does not establish the size of India’s available strategic stocks or how long current inventories could offset disrupted arrivals. Those are among the facts that will determine the duration and severity of any supply shock.
The institutional response remains incomplete in the reported episode. Queries sent to the ministries of ports and petroleum, as well as Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation, had not received responses. The absence of a recorded official response leaves open questions about route assessments, contingency planning, refinery inventories and the possible use of the maritime insurance pool.
For cities, the risk travels through systems that are usually invisible. Fuel is required for buses, trucks, construction equipment, generators, factories and goods distribution. A rise in the cost of imported crude does not affect only motorists or oil companies; it can alter the operating cost of urban transport and freight networks. The source material does not quantify these city-level effects, but it establishes the supply-chain channel through which they could emerge.
The larger issue is India’s exposure to concentrated maritime infrastructure. Oil imports are not governed only by contracts between buyers and sellers. They depend on safe sea lanes, functioning ports, affordable insurance, available tankers and predictable geopolitical conditions. When a chokepoint is threatened, the disruption is transmitted across all these layers at once.
The available evidence confirms a sharp rise in tanker costs, higher bunker fuel and insurance expenses, disrupted movement through Hormuz, and a heightened threat around Bab el-Mandeb. It also shows that India entered the episode with a large and rising crude import bill. What remains uncertain is the duration of the disruption, the volume of oil that can move through alternative routes, the response of Indian authorities and refiners, and the extent to which additional costs will reach domestic prices. Those developments will determine whether the present freight surge remains a shipping-market shock or becomes a wider energy and inflation challenge.
