India's Reliance books supertanker at record freight price to lift Iraqi crude

• Reliance booked the tanker at 1200 World Scale (12x benchmark) to load 2 million barrels of Iraqi crude, compared to pre-war freight costs of 0.8-0.9x benchmark (about $2 million total)
• Iraq is offering crude at $25-30 per barrel discounts to Dubai benchmarks to attract buyers willing to navigate the risky Strait of Hormuz amid increased attacks on commercial vessels
• South Korea's Sinokor will supply the vessel as one of few shipowners still willing to send tankers through the Strait, while other refiners seeking similar deals have failed to secure ships

Summary

India's Reliance Industries has paid a record $23-25 million to charter a supertanker for lifting Iraqi crude, highlighting severe shipping constraints in the Persian Gulf amid ongoing conflict. The freight rate of 1200 World Scale represents 12 times the benchmark rate—dramatically higher than pre-war costs of approximately $2 million (0.8-0.9 times benchmark).

Key Details:

• Reliance booked the vessel from South Korea's Sinokor to load 2 million barrels of Iraqi crude later this month
• The cargo will supply Reliance's refining complex in Gujarat, the world's largest
• Shipping traffic through the Strait of Hormuz remains well below pre-conflict averages of 125-140 vessels daily (conflict began end of February)

Market Dynamics:

Despite record freight costs, the transaction remains economically viable due to steep Iraqi crude discounts. Iraq's state oil marketer SOMO is offering crude at $25-30 per barrel below Dubai benchmarks to incentivize buyers willing to navigate the high-risk Strait of Hormuz.

Several Indian and Chinese refiners have sought vessels this week to capitalize on Iraqi discounts, but no additional fixtures have been confirmed as most shipowners remain reluctant to enter the waterway due to increased attacks on commercial vessels.

Implications:

The record freight rate underscores the limited pool of available tankers willing to operate in the Gulf region and reflects escalating geopolitical risk premiums. Sinokor is among the few shipowners continuing operations through the Strait of Hormuz. While Reliance expects to save millions despite elevated shipping costs, the situation points to continued supply chain pressures and volatile oil logistics in the Middle East.