Indian oil profits fall 81% due to falling refining margins

Net profit for the first quarter of the 2024/2025 fiscal year of Indian Oil, a major state-owned oil refiner, fell sharply by 81% compared to the same period last year due to a decrease in refining/sales margins as a burden on business results.

Net profit for the 2024/4/4/6 fiscal year was approximately 0.3 billion 16 million dollars (26.4 billion 30 million Indian rupees), down from 1.6 billion 40 million dollars (137.5 billion rupees) in the same period in 2023.

The company, which is a state-owned enterprise, cites “a decrease in refining margins due to a decrease in cracks in line with international trends, and suppression of sales margins in the current quarter” as the main cause of sluggish profits.

Indian oil's average refined margin for the first quarter of the 2024/2025 fiscal year was $6.39 per barrel compared to $8.34 in the same period last year.

Indian Oil and its subsidiaries hold approximately one-third of India's total refining capacity of approximately 5 million barrels per day (BPD).

Fuel consumption in India, which is the world's third-largest importer of crude oil, has been strong this year, and recorded a record high in early 2024, but refining margins for many refineries in Asia have declined due to rising international crude oil prices. Compared to last year, this year's margins have dropped drastically.

Additionally, the fall in domestic fuel prices has further hit domestic national refineries, starting with Indian Oil.

Hindustan Petroleum and Bharat Petroleum, which are state-owned oil refining companies, reported sharp declines in profits for the 2024/4-6 fiscal year at the beginning of this month.

Despite a 1.4% increase in sales, Hindustan Petroleum Corporation (HPCL)'s sole net profit decreased 94.2% from the same period last year.

Meanwhile, the net profit of Bharat Petroleum Corporation (BPCL) declined 73% due to a decline in refining margins and a drop in fuel prices ahead of India's general election, which was held for several weeks from April to June.