Indian Oil Jumps on Spot Crude Purchases Amid Middle East Disruptions
Indian Oil Corporation (IOC) is rapidly increasing its spot crude purchases due to supply disruptions in the Middle East. The Strait of Hormuz and Red Sea have been affected since the start of the US-Iran war in late February, forcing IOC to rely more heavily on the spot market.
IOC director (finance) Anuj Jain stated that the share of spot buying has risen from 50% to nearly 84%. This dramatic shift is a response to the Middle East disruptions, with IOC also increasing imports from West African and Latin American producers to compensate for the shortage.
Alongside its subsidiary Chennai Petroleum Corporation, IOC accounts for approximately one-third of India's 5.2 million barrels per day of refining capacity. The company aims to process 1.7 million barrels of crude oil per day at its directly owned refineries by 2027-28 and is expanding the capacity of some refinery units by year-end.
The increased reliance on spot purchases has resulted in higher crude prices, which impacted IOC's June profit. The company reported a standalone net loss of Rs 2,661 crore for the April-June quarter compared to a net profit of Rs 5,689 crore in the same period last year.