Indian Oil ramps up spot crude purchases as Middle East disruptions hit supplies

Supply disruptions in the Middle East have prompted Indian Oil Corporation (IOC) to overhaul its crude sourcing strategy, with the state-run refiner sharply increasing purchases from the spot market. The share of spot buying has risen from 50% to nearly 84%, IOC director (finance) Anuj Jain said on Saturday.The move 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. “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,” Jain said, as cited by Reuters.IOC, which depends heavily on spot purchases of Russian crude, has also increased imports from West African and Latin American producers to make up for the disruption in supplies from the Middle East, Jain stated.Along with its subsidiary Chennai Petroleum Corporation, IOC accounts for about one-third of India’s 5.2 million barrels per day of refining capacity. The company is also moving ahead with plans to expand its refining business.Jain added that IOC aims to process 1.7 million barrels of crude oil per day at its directly owned refineries in 2027-28. The company expects to expand the capacity of some refinery units by the end of this year.Higher crude prices hit June profitThe comments came a day after IOC reported a standalone net loss of Rs 2,661 crore for the April-June quarter, compared with a net profit of Rs 5,689 crore in the same period last year. Revenue from operations, however, rose 26% year-on-year to Rs 2,75,972 crore from Rs 2,18,608 crore.In a press release issued on Friday, Indian Oil said, “Decrease in Profitability is mainly on account of rise in crude cost due to West Asia conflict.”Even as profits came under pressure, IOC posted its highest-ever first-quarter crude throughput of 19.165 million metric tonnes (MMT), up 3% from 18.683 MMT a 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. Petroleum sales rose 1% to 22.542 MMT during the quarter. IOC said its domestic market share increased to 43.1% from 41.5% a year ago. Sales of petrol (MS) and diesel (HSD) also reached record quarterly highs of 4.522 MMT and 10.866 MMT, respectively.Natural gas sales increased 11% year-on-year to 1.873 MMT from 1.685 MMT. The petrochemicals business reported better profitability, helped by higher sales of products such as LAB, BA, PTA and butadiene, while profit from the gas business also increased significantly during the quarter.