A Quarter That Erases the Previous One

Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum together posted 30,106 crore rupees in net profit between July and September. That is 68.3% more than a year earlier, and a spectacular reversal after a combined loss of about 18,150 crores in the previous quarter. This single quarter accounts for the equivalent of 39% of the profit for the entire 2025-2026 fiscal year, set at 77,281 crores.

Refining Margins Drive the Rebound

The explanation lies in the spread between refined product prices and crude, which exploded with the conflict in the Middle East. Crude had topped $100 a barrel in the first quarter, pushing distributors into the red. In the following quarter, HPCL earned $32.15 per barrel processed, against $8.80 a year earlier; BPCL, $32.53 against $10.78. Pakistani refineries followed the same logic, with profit multiplied nearly twentyfold over the period.

Highly Uneven Gains

The overall picture masks sharp disparities. IOC posted a record profit of 21,630 crores, almost three times the 7,610 crores of a year earlier. Conversely, BPCL fell 22.5% to 4,993 crores and HPCL 9% to 3,483 crores. Refining margins therefore do not benefit groups equally, depending on their exposure to petrochemicals, gas or distribution.

Administered Prices, the Achilles' Heel

Petrol and diesel prices have been frozen since May, and domestic LPG since March. Until recently, the groups were losing 4 to 5 rupees per litre of petrol and 18 to 20 on diesel. For LPG, the shortfall per cylinder rose from 184 rupees in September to 229 in October, and should reach 309 in November then 370 in December. Absent rapid public compensation, cumulative under-recoveries reached 67,900 crores at the end of September.

Partly Cyclical Performance

Part of the result also comes from an inventory gain of about 7,000 crores, linked to the temporary decline in crude between mid-June and mid-August. IOC warns that profitability in coming quarters could suffer from inventory losses if the situation in the Middle East normalised and crude fell. The file provides no subsequent data to settle the question, and available European gas flows or electricity prices do not establish a link with these margins.

Key Takeaways

The geopolitical shock shifted value upstream in refining, to the detriment of distribution at controlled prices. But dependence on a market differential, the concentration of gains in a single group and the accumulation of unpaid subsidies make this rebound a fragile gain, not a new equilibrium.

This article was written with the assistance of artificial intelligence and verified by our editorial team.