They are sold by Shantay, Beefy Bill, the Market seller, the Bandit Shopkeeper and Jossik. There is a jug of water spawn in the palace of Al Kharid and in the cooking shop in Yanille. You can also obtain a free jug of water by speaking with Hassan in the Al Kharid Palace. Although the dialogue with Hassan when obtaining the water is related to drinking it, players cannot drink any jugs of water. The only way a player can drink any water is from a waterskin while in the desert.