Daily charter hire rates for tankers to India have more than doubled to $250,000 in about two weeks, as escalating hostilities in the Red Sea and Strait of Hormuz push up the cost of shipping oil to the world’s third-largest oil importer, three people familiar with the developments said.
The development comes as traffic through the Strait of Hormuz remains severely disrupted, raising the risk of further pressure on shipping and energy supplies in the region. Rates have risen 150% from about $100,000 as Houthi forces seized control of Yemen’s Mocha port near the Bab el-Mandeb Strait , the people said. Bunker fuel prices have also risen 50% to $900 a tonne, while insurance costs have increased 20%, adding to the cost of imports. West Asia accounts for about 30% of India’s current oil and gas imports. The development is significant for India, as every $1 increase in crude oil prices raises the annual import bill by ₹ 18,000 crore, affecting inflation and growth. In July, India’s retail inflation rose to a 19-month high of 4.45%. DP World operates a global logistics and ports network across 80 countries and has a 10% share of global container traffic.
However, an executive with an Indian shipping company, speaking on condition of anonymity, said Indian ships are currently not plying through the affected routes and are therefore not using insurance support.
Iran-backed Houthi forces seized Yemen’s Red Sea port city of Mocha last week and have since advanced toward the Bab el-Mandeb Strait, reaching the strategically located Perim (Mayun) Island and further threatening shipping through the key Red Sea chokepoint, according to Reuters and other reports. “There is very limited movement of ships around the Strait of Hormuz and the little that moves, paying hefty war risk premium that has also gone up further high over the already elevated levels,” said a UAE-headquartered logistics major DP World executive, who did not want to be named.
