Indian Oil Corporation (IOC) has dramatically increased its reliance on spot crude purchases to address Middle East supply disruptions. According to reports from Reuters, the state-run refiner's share of spot buying has risen from 50% to nearly 84%, as IOC director (finance) Anuj Jain announced at an analyst meeting on Saturday following the June quarter earnings. This strategic pivot comes after supplies through the Strait of Hormuz and the Red Sea were disrupted following the start of the US-Iran war in late February, pushing Indian refiners towards spot purchases. As Jain explained, "Our spot volume jumped from 50% to almost 84%, and the situation is very very dynamic...we keep track of the development on a day-to-day basis and try to optimize our crude sourcing."
IOC has expanded its crude sourcing beyond traditional Middle Eastern suppliers to maintain operational stability. As reported by Reuters, the company has increased imports from West African and Latin American producers to make up for disrupted Middle East supplies. The company, which depends heavily on spot purchases of Russian crude, continues to monitor the dynamic situation on a day-to-day basis to optimize its crude sourcing strategy. This diversification strategy has become crucial as Indian refiners have switched to spot purchases due to supply disruption from the Strait of Hormuz and Red Sea following the U.S.-Iran war.
IOC is advancing its refining capacity expansion despite current market challenges. According to Reuters, the company aims to process 1.7 million barrels of crude oil per day at its directly owned refineries in 2027-28. IOC, along with its subsidiary Chennai Petroleum Corporation, accounts for about one-third of India's 5.2 million barrels per day of refining capacity. The company expects to expand the capacity of some refinery units by the end of this year, positioning itself for future growth despite current supply disruptions.
IOC reported mixed financial results for the April-June quarter, with higher crude costs impacting profitability. As reported by Reuters, the company posted a standalone net loss of ₹2,661 crore for Q1, compared with a net profit of ₹5,689 crore in the same period last year. However, revenue from operations rose 26% year-on-year to ₹2,75,972 crore from ₹2,18,608 crore. The company attributed the decrease in profitability to rising crude costs due to the West Asia conflict, highlighting the financial impact of increased spot purchases during the quarter.
Despite profit pressures, IOC achieved several operational milestones during the quarter. According to the company's press release, IOC posted its highest-ever first-quarter crude throughput of 19.165 million metric tonnes, up 3% from 18.683 MMT year-earlier. Refinery capacity utilisation improved to 109.4% from 106.7%, while fuel and loss dropped to a record low of 8.04% in the post-BS VI era. The company's cross-country pipeline network also recorded its highest-ever quarterly throughput at 28.548 MMT, up 9% from 26.256 MMT in the year-ago quarter.
