Indian Oil Corporation Boosts LPG Output and Diversifies Sourcing Amid West Asia Conflict

State-owned Indian Oil Corporation (IOC) ramped up its liquefied petroleum gas (LPG) production by nearly 30 per cent and kept its refineries operating above 100 per cent utilization following disruptions to maritime trade through the Strait of Hormuz, according to Chairman Arvinder Singh Sahney.

Speaking at the company's 67th annual general meeting, Sahney stated that the escalation of conflict in West Asia disrupted global energy markets and threatened India's energy supplies. India imports more than 88 per cent of its crude oil requirement, with about 45 per cent of crude imports and nearly 90 per cent of LPG imports linked to the Strait of Hormuz.

"For IndianOil, the priority during this unprecedented crisis has remained crystal clear - to maintain continuity of energy supplies despite constrained sourcing options and volatile international markets," Sahney said.

To navigate the supply gaps, IOC diversified its crude sourcing, realigned refinery operations, and secured alternative supplies. The company utilized 24-hour control rooms, daily reviews, and real-time market monitoring. Sahney noted that IOC maintained product availability despite a significant shift away from Middle Eastern crude grades, keeping refineries operating above 100 per cent utilization and securing additional LNG from diversified geographies.

The supply challenges coincided with a strong financial period for IOC. For the year ended March 2026, the company posted a standalone net profit of Rs 36,802 crore on a turnover of about Rs 8.86 lakh crore, with aggregate sales exceeding 105 million tonnes across petroleum products, natural gas, and petrochemicals. Refineries processed a record 75.45 million tonnes of crude during the year, while liquid pipeline throughput reached 102.52 million tonnes and domestic petroleum-product sales rose to 88.97 million tonnes.

The momentum continued into the first quarter of the current financial year. IOC processed a record 19.17 million tonnes of crude at 109.4 per cent capacity utilisation, while pipeline throughput reached a quarterly record of 28.55 million tonnes. Domestic petroleum-product market share rose to 43.1 per cent.

"While profitability during the quarter remained under pressure from higher crude costs arising from the West Asia conflict, the strength of our operating performance gives us confidence in the underlying resilience of your company," Sahney said.

IOC is currently accelerating investments in core refining operations with expansions at Panipat, Gujarat, and Barauni, which are expected to raise group refining capacity from 80.75 million tonnes a year to about 98 million tonnes. Furthermore, the company aims to reduce its dependence on traditional refining by targeting higher contributions from petrochemicals, natural gas, renewables, biofuels, green hydrogen, and sustainable aviation fuel. Plans include raising petrochemical intensity to about 15 per cent by 2030 and increasing natural-gas sales 1.5 times by the same year.

Construction has also begun on a large-scale green hydrogen plant at Panipat, and IOC has received ISCC CORSIA certification for sustainable aviation fuel production. Its renewable-energy arm, Terra Clean, is developing 1 gigawatt of capacity with another 4.3 gigawatts under preparation.

Reflecting on the geopolitical disruptions, Sahney emphasized that resilience must be established proactively. "In an uncertain world, energy security depends not only on scale, but equally on agility, diversification and preparedness," he concluded.

"Indian Oil Corporation's response to the Strait of Hormuz disruption highlights the critical role of operational agility and supply chain diversification in enterprise management. When geopolitical tensions threaten traditional sourcing channels, businesses must be quick to realign operations and secure alternative inputs to protect continuity. IOC's ability to maintain over 100 percent refinery utilization and ramp up LPG output during a crisis underscores the importance of proactive preparedness and strong internal monitoring systems for large-scale industrial operations." — Dr. Shishir Gupta, Founder & CEO, StartupLanes