Crude oil sourcing presently volatile; procuring more on landed basis: HPCL Chief

Crude oil sourcing at present is very volatile and unpredictable, and Hindustan Petroleum is procuring more on a delivered basis than free-on-board (FOB) and term contracts, Vikas Kaushal, Chairman and Managing Director (CMD) of the state-owned oil-marketing company told analysts in an investor call on Friday (October 23, 2026).

Purchases on delivered basis entail the seller bearing the cost of shipping the oil and associated risks until it reaches the buyer’s port or facility.

“All I can say if you look at crude premiums and landed cost: there are times when there are premiums and there are times when you can even pick it up at discounts. It is a very ‘Wild West’ right now” he said.

Separately, Mr. Kaushal also explained there could be instances of discount though the freights could be very high at that time.

‘Freight rates have doubled QoQ’

Srividya Venkataraman, Director (Finance) informed analysts that freight costs had doubled between the first quarter and the second quarter.

She observed that shipping costs on a Suezmax tanker moved up to $9 per barrel from around $4 per barrel in June.

Though, Mr. Kaushal also stated that landed price may not be as high as it may appear.

“The producers of oil are also stuck. Thus, the astronomical freight rates that you see: if you strike a good deal, you can get is almost managed on the producer,” he explained, adding, “So, the net back to producers in many situations, especially those who are stuck or where there is stranded oil right now, the net backs are much lower than what is in the public domain.”

The HPCL chief also told analysts that the company is procuring more on landed basis expect in cases where sending a ship is cheaper. He added this is also to avert the probability of a ship being attacked enroute.

LPG under-recoveries

Ms. Venkataraman informed that under-recoveries on liquified petroleum gas (LPG) stood at ₹245 per cylinder in October and is projected at ₹327 per cylinder in November.

She added that the total under-recovery for LPG in the September-end quarter stood at ₹500 crores.

Separately, Mr. Kaushal also informed analysts that Hindustan Petroleum has petrol and diesel stocks combined for twenty days. This excludes the crude that is presently being processed in their refineries.