NEW DELHI: The ongoing attacks on shipping vessels by Houthi militants in the Red Sea have not impacted the flow of crude oil to India but have elevated the price of freight, said Pushp Kumar Joshi, the chairman of Hindustan Petroleum Corporation Ltd. (HPCL).
During a post-third quarter earnings call with investors, Joshi attributed the increase in freight costs to the need to reroute shipping vessels via the Cape of Good Hope.
However, he also assured that the company doesn’t anticipate any supply disruptions, as HPCL has secured crude oil supplies until mid-April 2024. Joshi explained that the company fulfills 44–45% of its crude oil requirements through term contracts with national oil companies like those in Saudi Arabia and Iraq, while the remainder is sourced from spot purchases or the current market.
“Crude oil supplies have not seen any disruption as of now. This has definitely impacted the freight rates, and freight rates have traveled northward,” said Joshi.
Regarding supply, he said that the company is quite confident that its requirements are being met. “We also have to see how this situation unfolds in the next few weeks; based on that, we will have to make a decision. But as far as the procurement side is concerned, I am already in a comfortable situation till March 31 and two weeks into April,” he added.
Following a US-led coalition strike on Iran-backed Houthi militants in northern Yemen, shipping companies are avoiding the Red Sea and Bab al-Mandab Strait. Due to the rerouting of voyages through the Cape of Good Hope instead of the Suez Canal, shipments from India to the US will take an additional 10–14 days, while shipments from Europe and the Mediterranean will take 20–25 days.
Regarding Russian imports, he mentioned that Russian oil accounted for 30% of all crude oil imported by HPCL in 2023. Meanwhile, HPCL posted a standalone net profit of R529 crore in the third quarter of the financial year 2023–24, marking an increase of more than three times compared to the same period last year.