What a lower in Reliance’s Russian oil purchases would imply for India

India’s largest personal oil refinery, Reliance Industries, is supposedly droop purchases of Russian oil, following the US choice to sanction Russia’s two largest oil firms, Rosneft and Lukoil.

Reliance has change into a significant purchaser of Russian oil. In September, it bought about 629,590 barrels of Russian oil per day from the 2 firms, out of whole Indian imports of 1.6 million barrels per day, based on knowledge from commodities knowledge evaluation agency Kpler.

In the identical month final yr, Reliance bought round 428,000 barrels per day of oil from Russian firms.

The truth is, India’s Russian crude oil imports accounted for lower than 3% of its whole crude oil import basket, however immediately they account for a 3rd of India’s crude oil imports, consultants say.

Reliance didn’t reply to CNBC’s requests for touch upon studies that it was halting purchases of Russian oil. In an announcement on Friday, Reliance Industries stated it might adjust to “EU tips on the import of refined merchandise into Europe” however indicated that there was no steering but from the Indian authorities on decreasing crude oil imports from Russia.

The corporate added that its diversified oil provide technique would assist its refinery operations meet home and export wants.

The US Treasury Division on Wednesday charged sanctions about Rosneft and Lukoil, citing Moscow’s “lack of great dedication” to ending the warfare in Ukraine. The sanctions purpose to “degrade” the Kremlin’s capability to finance its warfare, the US division stated, signaling that extra measures may observe.

If Reliance stops Russian purchases, it should have “unfavourable impacts on [Reliance’s] margin and profitability, as Russian oil constitutes greater than 50% of [its] uncooked eating regimen,” stated Pankaj Srivastava, senior vice chairman of petroleum commodity markets at market analysis agency Rystad Power, in emailed feedback.

He added that the supply of “comparable oil will not be a problem” and could possibly be sourced from West Asia, Brazil or Guyana, however Reliance is unlikely to get the identical worth it does for Russian oil because it has long-term agreements with suppliers reminiscent of Rosneft.

Final December, Reliance Industries signed a deal to import crude oil value $12 billion to $13 billion a yr from Russia’s Rosneft for 10 years, which might translate into about 500,000 barrels a day, based on a report by Reuters.

The acquisition of Russian crude by Indian refiners was an “opportunistic buy” pushed by reductions to comparable qualities, stated Vandana Hari of Vanda Insights.

India purchased 38% of Russia’s crude oil exports in September, second solely to China at 47%, based on the Helsinki-based assume tank Middle for Power and Clear Air.

Hari added that Indian refiners may simply change to buying from sources, with the trade-off being “strain on refining margins”.

Muyu Xu, senior crude oil analyst at Kpler, stated the Indian refining large could face some near-term points because it seems to exchange Russian crude.

“Given the big volumes of the Reliance-Rosneft deal, we anticipate some near-term friction for Reliance in securing substitute barrels,” stated Muyu Xu, senior crude oil analyst at Kpler.

She added that “Russia’s medium-sour Urals stay round $5–6/bbl [barrel] cheaper than Center Japanese oil of comparable high quality.

A Jefferies report final month indicated that the impression of Reliance Industries’ transfer away from Russian oil was “manageable.”

The brokerage stated in September it had acquired questions from traders in regards to the attainable monetary impression on Reliance if it halted imports of Russian oil because of sanctions.

The profit from Russian oil represents about 2.1% of the corporate’s estimated consolidated EBITDA of two.05 trillion rupees ($22.8 billion) for fiscal 2027, the brokerage stated.

Reliance’s consolidated EBITDA for the six months of fiscal 2026 was 1.08 trillion Indian rupees ($12.3 billion), of which 295 billion rupees got here from its oil-to-chemicals phase, whereas its telecom and retail ventures collectively contributed practically 500 billion rupees.

Different Indian refineries are additionally trying to reduce imports of Russian oil. The abandonment of Russian oil may increase India’s import bill, but it will not be “as big a shock as [it] it could have been if oil was in the $70 or $80 range,” said Hari of Vanda Insights.