Reliance Industries Reportedly Halting Russian Oil Purchases Following U.S. Sanctions

Reliance Industries, India’s largest private oil refiner, is reportedly stopping its purchases of Russian crude after the U.S. sanctioned Russia’s two biggest oil companies, Rosneft and Lukoil. The U.S. Treasury levied sanctions to “degrade” Moscow’s ability to finance the war in Ukraine.

This move is highly significant, as Russian oil has dramatically increased its share in India’s energy imports, now accounting for one-third of the country’s total crude imports. In September alone, Reliance was a major buyer, importing approximately 630,000 barrels per day from the two sanctioned Russian firms.

Potential Impact and Mitigation

Financial Impact:

• Analysts warn the halt will likely have a “negative impact on [Reliance’s] margin and profitability,” as Russian crude currently makes up over 50% of its refinery input.

• The company, which signed a 10-year deal with Rosneft last December, benefits from the heavily discounted price of Russian Urals crude, which is estimated to be $5–6 per barrel cheaper than comparable Middle Eastern oil.

• However, one brokerage report suggested the financial impact is “manageable,” accounting for about 2.1% of the firm’s estimated 2027 consolidated EBITDA.

Sourcing Strategy:

• Reliance stated that its diversified crude sourcing strategy will help its refineries meet demand, and the availability of similar crude grades from regions like West Asia, Brazil, and Guyana is not an issue.

• The core challenge will be replacing the favorable pricing secured through long-term Russian deals.

Broader Context:

• India’s initial pivot to Russian oil was “opportunistic buying” driven by the deep discounts. Experts suggest that as the arbitrage opportunity has tapered off, the economic necessity for major Russian purchases has decreased.

• Other Indian refiners are also reportedly seeking to reduce Russian oil imports. While this may slightly increase India’s overall import bill, the current lower global crude prices reduce the potential financial shock.