Indian Oil to Face Margin Squeeze in 2025 Amid Declining Crude Prices

Indian Oil Corporation (NSE: IOC), one of India’s leading oil refiners, is bracing for a turbulent 2025 as global and domestic factors converge to challenge its profitability. Falling Brent crude oil prices, a double-edged sword for energy-importing nations like India, are at the heart of this shift. While lower crude prices reduce import costs and provide macroeconomic benefits, they pose mixed outcomes for refiners like Indian Oil.

On the one hand, declining crude prices ease retail fuel and input costs. On the other, they erode product realizations—the prices at which refined products are sold—leading to inventory losses and narrower refining spreads. These spreads, the critical difference between crude oil costs and refined product prices, are integral to the profitability of refining and marketing operations. A shrinking spread translates directly into thinner margins, even as input costs fall.

The financial toll is evident in Visible Alpha’s consensus forecasts. Having been impacted by a sharp -12% oil price decline in 2024, Indian Oil’s consolidated revenue is further projected to drop -4% year-over-year to ₹7.5 trillion in 2025. Meanwhile, consolidated net income is expected to plunge -69% to ₹130 billion, with consolidated EBITDA declining -51%, reflecting significant pressure across the refining and marketing segments.