IOC says crude Q2 price volatile as procurement swings between discounts and premiums

IOC Reports Sharp Swings in Crude Costs

Indian Oil Corporation's finance director, Anuj Jain, told investors on a post-results call that crude procurement costs moved within a wide band during the September quarter. Purchases were struck at discounts of up to $5 per barrel and premiums of as much as $12 per barrel relative to benchmark prices. In the preceding quarter, the range ran from no discount or premium to a premium of $18 per barrel. The volatility coincided with a strong result: IOC's net profit for the quarter more than doubled year-on-year to ₹21,630 crore, helped by better refining margins and a temporary softening in benchmark crude prices.

Why the Numbers Matter

For a refiner of IOC's scale, the gap between discount and premium procurement directly affects input costs, gross refining margins and, ultimately, the tax and royalty collections that flow from the downstream sector. The company sourced about 87% of its crude through spot purchases during the period, so pricing outcomes depended heavily on negotiation and on where cargoes originated. Russian crude made up roughly 55% of the basket in the first half of the fiscal, followed by Middle East suppliers, mainly Saudi Arabia and Dubai, at 24%. Africa, including Angola and Nigeria, contributed about 10%, Brazil 7%, and the United States and Venezuela together accounted for the remaining share in the low single digits. Jain noted that spot buying does not automatically carry a premium, since prices differ by region and grade, and that discounted Iraqi crude had re-entered the mix in recent months.

LPG Under-Recoveries in Focus

Jain also disclosed the trajectory of LPG under-recoveries, a figure that matters for subsidy accounting and for assessing the burden carried on each cylinder sold below cost. Under-recoveries stood at ₹184 per cylinder in September and rose to ₹229 in October. They are projected at ₹309 per cylinder in November and ₹370 per cylinder in December. This steep sequential rise i…