Indian Oil quarterly profit falls 52% on inventory losses, lower fuel prices.
Indian Oil Corp (IOC) reports 52% profit drop due to inventory losses & fuel sold below market price. Indian fuel prices stagnant despite rising global prices.
Indian Oil Corporation (IOC) announced a 52% decrease in its fourth-quarter profit on Tuesday, primarily attributed to inventory losses and the sale of fuel at prices below the market rate.
Despite India's standing as the world's third-largest oil importer and consumer, Indian Oil, alongside its subsidiary Chennai Petroleum, maintains control over approximately one-third of the country's refining capacity, totaling five million barrels per day.
India's inclination towards purchasing cost-effective Russian oil has been evident, although the discounts have notably diminished from $30 per barrel in 2022 to less than $10 this year. Concurrently, refiners have reduced fuel prices at pumps in anticipation of the upcoming general elections. For the quarter concluding on March 31, IOC recorded a 52% decline in profit, amounting to 48.38 billion rupees ($579.77 million).
Refiners engage in the purchase of crude oil, processing it within a timeframe of 45-60 days. An inventory gain is registered when oil prices escalate by the time the crude is refined and the fuel is sold.
This year, crude oil prices have surged by approximately 15%. Despite this, Indian fuel prices remained stagnant throughout the fiscal year 2023-2024, even amidst the rising market prices for refined products in Asia, resulting in losses for local refiners.
IOC experienced a decline of 2.7% in revenue from operations, totaling 2.2 trillion rupees.
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