Reliance Industries Ltd oil refinery. In Jamnagar, Gujarat, India, on Saturday, July 31, 2021.
Bloomberg | Bloomberg | Getty Images
The largest private oil refiner in India is Reliance Industries It is said Stop buying Russian crude yet The American decision to impose sanctions The two largest oil companies in Russia, Rosneft and Lukoil.
Reliance has become a major buyer of Russian crude. In September, it bought about 629,590 barrels of Russian crude per day from the two companies, out of India’s total imports of 1.6 million barrels per day, according to data from commodity data analytics firm Kpler.
During the same month last year, Reliance purchased about 428,000 barrels per day of oil from Russian companies.
In fact, India’s imports of Russian crude oil represented less than 3% of its total basket of crude oil imports, but today they represent a third of India’s crude oil imports, experts say.
Reliance did not respond to CNBC’s requests for comment on reports of a halt to purchasing Russian crude. In a statement issued late on Friday, Reliance Industries said it would adhere to “EU directives on import of refined products into Europe” but noted that there are no directives from the Indian government yet on limiting crude oil imports from Russia.
The company added that the strategy of diversifying crude oil sources will help its refinery operations meet local and export requirements.
The US Treasury Department imposed the order on Wednesday Penalties on Rosneft and Lukoil, citing Moscow’s “lack of serious commitment” to ending the war in Ukraine. The US Department said that the sanctions aim to “weaken” the Kremlin’s ability to finance its war, indicating the possibility of further measures being taken.
If Reliance stops Russian purchases, it will have “negative effects on Russia.” [Reliance’s] Margin and profitability, as Russian crude represents more than 50% of… [its] “The raw diet,” Pankaj Srivastava, senior vice president of commodity oil markets at market research firm Rystad Energy, said in emailed comments.
He added that the availability of “similar crude is not a problem” and can be obtained from West Asia, Brazil or Guyana, but it is unlikely that Reliance will get the same price as it does from Russian crude, as it has long-term deals with suppliers such as Rosneft.
Last December, Reliance Industries signed a deal to import crude oil worth between $12 billion and $13 billion annually from Russia’s Rosneft for 10 years, which will translate into nearly 500,000 barrels per day, according to a report issued by Russia’s Rosneft. Reuters.
“Opportunistic buying”
Vandana Hari of Vanda Insights said Indian refiners’ purchase of Russian oil was an “opportunistic buy” driven by discounts for similar grades.
India bought 38% of Russian crude oil exports in September, ranking second after China at 47%, according to the Helsinki-based Research Center for Energy and Clean Air.
Indian refiners could easily focus on buying from sources, where the trade-off represents “pressure on refining margins,” Hari added.
Moyu Xu, senior crude oil analyst at Kpler, said the Indian refining giant may face some problems in the short term as it looks to replace Russian crude.
“Given the large volumes under the Reliance and Rosneft deal, we expect some short-term friction for Reliance in securing replacement barrels,” says Moyu Xu, senior crude oil analyst at Kpler.
She added that the price of medium sour Urals crude in Russia still ranges between $5 and $6 per barrel [barrel] Cheaper than Middle Eastern crude of similar quality.
A Jefferies report last month noted that the impact of Reliance Industries’ move away from Russian oil was “manageable.”
The brokerage firm said in September that it had received inquiries from investors about the potential financial impact on Reliance if it halts its imports of Russian oil due to sanctions.
The brokerage firm said that benefits from Russian crude represent about 2.1% of the company’s estimated consolidated earnings before interest, taxes, depreciation and amortization of 2.05 trillion rupees ($22.8 billion) for fiscal year 2027.
Reliance’s consolidated EBITDA for the six months of FY26 was INR 1.08 trillion ($12.3 billion), of which INR 295 billion came from the oil-to-chemicals segment, while its telecom and retail ventures together contributed about INR 500 billion.
Hopes for reaching an American trade agreement
Other Indian refiners are also looking To reduce imports From Russian oil. Weaning off Russian oil may increase India’s import bill, but it will not be “as big a shock as it is for India.” [it] “This might have been the case if the price of crude oil had been in the $70 or $80 range,” said Harry of Vanda Insights.
we West Texas Intermediate futures Crude oil traded around $61.83 per barrel on Friday.
Experts also say that the benefits of India reducing its purchases of Russian oil outweigh the negatives.
According to Trinh Nguyen, chief economist at Natixis, the arbitrage offered by Russian oil during the energy crisis has diminished, and India now no longer needs to buy large quantities of Russian oil.
India’s purchase of Russian crude oil was a sore point in its trade relations with the United States, which culminated in the United States imposing a total tariff of 50% on Indian goods exported to the United States.
With expectations that state-owned and private refiners will stop purchasing Russian crude – a long-term demand of US President Donald Trump – India’s chances of negotiating a mutually beneficial trade agreement with the United States have increased.
— CNBC’s Ying Shan Li contributed to this report
https://image.cnbcfm.com/api/v1/image/108121904-1743046749258-gettyimages-1234869791-INDIA_RELIANCE.jpeg?v=1743046781&w=1920&h=1080
2025-10-27 02:23:00
