Indian Oil Posts Higher Profit as Crude Prices Swing

Crude oil prices saw heavy ups and downs in the quarter ending in September, with purchases made at both discounts and premiums at different times. Indian Oil Director of Finance Anuj Jain shared this update with investors during a post-results call on Saturday.

Financials and LPG Losses

The Delhi-based oil refiner saw its net profit more than double to ₹21,630 crore in the second quarter compared to the same period last year. Better refining margins and a short drop in benchmark crude oil prices helped drive this growth. At the same time, the company faced growing losses on cooking gas. Under-recoveries on liquified petroleum gas stood at ₹184 per cylinder in September and rose to ₹229 per cylinder in October. These losses are projected to climb further to ₹309 per cylinder in November and ₹370 per cylinder in December.

Sourcing and Geography

During the quarter, crude prices swung from a discount of $5 per barrel to a premium of $12 per barrel compared to benchmark prices. In the first quarter, prices ranged from no discount or premium up to a premium of $18 per barrel. Final prices depended on factors like free-on-board or delivered pricing, freight costs, and crude type. Russian crude made up about 55% of the company's basket in the first half of the fiscal year. Middle Eastern oil, mostly from Saudi Arabia and Dubai, accounted for 24%. African nations like Angola and Nigeria supplied about 10%, Brazil contributed 7%, the United States provided 2% to 5%, and Venezuela made up 3% to 4%. Spot sourcing made up about 87% of Indian Oil's total crude basket.

Context

Oil refiners like Indian Oil rely heavily on global crude imports to meet domestic fuel demand, making them vulnerable to international price swings and supply chain shifts. Managing these import costs directly affects both corporate profits and state-set retail fuel prices for consumers across the country.