India and UAE explore strategic oil storage arrangements

India and the United Arab Emirates are considering a reciprocal strategic oil storage arrangement. Following a 2018 deal that allowed the Abu Dhabi National Oil Company (ADNOC) to store up to 30 million barrels of crude in India, New Delhi is now exploring the possibility of holding part of its strategic oil reserves in Fujairah. This location offers a logistical advantage as tankers can load outside the Strait of Hormuz.

Meanwhile, Indian state-owned refiner Hindustan Petroleum Corporation Limited (HPCL) reports difficulties in securing tankers to transit the Strait of Hormuz. HPCL Chairman Vikas Kaushal noted that vessel scarcity and shipowners' reluctance to risk transits through the Strait have forced the company to pivot toward the spot market and arrange direct deliveries to its refineries. The shortage of very large crude carriers (VLCCs), caused by ship-to-ship transfers in the Gulf of Oman, has also driven up rates for smaller vessels, increasing the overall cost of crude oil cargoes.