Indian Oil to Buy Its Own Crude and LPG Ships as the West Asia Crisis Exposes Shipping Risks

Almost all the crude oil and LPG that India imports comes by sea, in special ships called tankers and gas carriers. The money paid to move this cargo is called freight, and it is a real part of the price of petrol, diesel and cooking gas. When a sea route becomes dangerous, shipowners charge more, insurers add a "war risk" charge, and some owners refuse to go at all. That is why who controls the ships matters for a country's energy supply.

Every merchant ship must be registered in one country and fly that country's flag. That country is called the flag state, and its laws apply on board, wherever the ship sails. Many shipowners register their ships in countries with low fees and light rules, such as Panama, Liberia and the Marshall Islands, which are called flags of convenience or open registries. A country whose own trade is carried mostly by foreign-flagged ships has less control over its supply in an emergency.

Energy security means a country can always get the energy it needs, at a price it can afford. For India, the biggest part of this problem is oil and gas. India imports most of the crude oil it refines and a large share of the LPG it uses, and much of it comes from West Asia through the Strait of Hormuz. Any war or blockade there threatens fuel supply and prices at home.