What a cut in Reliance's Russian crude purchases would mean for India

India's largest backstage lipid refiner Reliance Industries is reportedly halting purchases of Russian crude, pursuing the U.S.' determination to sanction Russia's 2 largest lipid companies, Rosneft and Lukoil.

Reliance has go a large purchaser of Russian crude. In September, it purchased astir 629,590 barrels of Russian crude per time from the 2 firms, retired of India's full imports of 1.6 cardinal barrels per day, according to information by commodities information analytics steadfast Kpler.

Over the aforesaid period past year, Reliance purchased astir 428,000 barrels per time of lipid from the Russian companies.

In fact, India's Russian crude imports utilized to relationship for little than 3% of its full crude import basket, but contiguous relationship for one-third of India's crude imports, experts say.

Reliance has not responded to CNBC requests for remark connected reports that it is stopping the acquisition of Russian crude.

It comes as the U.S. Treasury Department connected Wednesday levied sanctions on Rosneft and Lukoil, citing Moscow's "lack of superior commitment" to ending the warfare successful Ukraine. The sanctions purpose to "degrade" the Kremlin's quality to concern its war, the U.S. department said, signaling much measures could follow.

If Reliance does halt Russian purchases, it volition person "negative impacts connected [Reliance's] borderline and profitability arsenic Russian crude represent much than 50% of [its] crude diet," Pankaj Srivastava, SVP of commodity lipid markets astatine marketplace probe steadfast Rystad Energy said successful emailed comments.

He added that the availability of "similar crude is not an issue" and tin beryllium sourced from West Asia, Brazil, oregon Guyana, but Reliance is improbable to get the aforesaid terms arsenic it does connected Russian crude, arsenic it has semipermanent deals with suppliers similar Rosneft.

Last December, Reliance Industries signed a woody to import crude lipid worthy $12 billion-$13 cardinal a twelvemonth from Russia's Rosneft for 10 years, which would construe to astir 500,000 barrels per day, according to a study by Reuters.

The acquisition of Russian lipid by Indian refiners was "opportunistic buying" driven by discounts versus comparable grades, said Vandana Hari of Vanda Insights.

India bought 38% of Russia's crude exports successful September, 2nd lone to China astatine 47% according to Helsinki-based deliberation vessel Centre for Energy and Clean Air.

Hari added that Indian refineries tin easy pivot to buying from sources with the trade-off being "pressure connected refining margins."

Muyu Xu, elder crude lipid expert astatine Kpler, said the Indian refining elephantine mightiness look immoderate short-term issues arsenic it looks to regenerate the Russian crude.

"Given the ample volumes nether the Reliance-Rosneft deal, we expect immoderate short-term friction for Reliance successful securing replacement barrels," says Muyu Xu, elder crude lipid expert astatine Kpler.

She added that "Russia's medium-sour Urals remains astir $5–6/bbl [barrel] cheaper than Middle Eastern crude of akin quality.

A study by Jefferies past period indicated that the interaction of Reliance Industries moving distant from Russian lipid was "manageable."

The brokerage said successful September that it had received queries from investors astir the imaginable fiscal interaction connected Reliance if it halts its imports of Russian lipid owed to sanctions.

The payment of Russian crude accounts for astir 2.1% of the firm's estimated consolidated EBITDA of 2.05 trillion rupees ($ 22.8 billion) for fiscal twelvemonth 2027, the brokerage said.

Reliance's consolidated EBITDA for the six months of fiscal twelvemonth 2026 was 1.08 trillion Indian rupees ($12.3 billion), of which 295 cardinal rupees were from its oil-to-chemicals segment, portion its telecom and retail ventures unneurotic contributed to astir 500 cardinal rupees.

Other Indian refiners are besides looking to chopped imports of Russian oil. Weaning disconnected Russian lipid mightiness rise India's import bill, but it won't beryllium "as large a sticker daze arsenic [it] mightiness person been if crude was successful the $70 oregon $80 range," said Hari of Vanda Insights.

U.S. West Texas Intermediate futures were trading astir $61.83 a tube connected Friday.

Experts besides accidental the benefits of India cutting backmost connected Russian lipid purchases outweigh the downsides.

According to Natixis' Senior Economist Trinh Nguyen, the arbitrage that Russian lipid offered during the vigor situation has tapered off, and determination is nary request for India present to person important purchases of Russian oil.

India's Russian crude acquisition has been a sore constituent successful its commercialized relations with the U.S., which culminated successful the U.S. imposing a full 50% tariff connected Indian goods exported to the U.S..

With some state-owned and backstage refiners expected to halt acquisition of Russian crude — a long-standing request of U.S. President Donald Trump — the chances of India negotiating a mutually beneficial commercialized woody with the U.S. person increased.

— CNBC's Ying Shan Lee contributed to this report