Reliance Industries Ltd. (RIL) is carefully assessing the implications of recent sanctions imposed by the United States Department of the Treasury, the European Union and the United Kingdom on major Russian oil producers, as the company moves to align with compliance obligations while managing potential impacts on its refining business.
The new U.S. sanctions announced on October 22 specifically target Rosneft Oil Company and Lukoil Oil Company, two of Russia’s largest crude-oil exporters.
Under the restrictions, non-U.S. entities must wind down business with those firms by November 21, or risk secondary sanctions.
Reliance, which has a long-term deal to import approximately 500,000 barrels per day from Rosneft, is one of the most exposed refiners in India due to its historically large purchases of discounted Russian crude.
In its official statement, Reliance affirmed that it has “noted the recent restrictions announced by the European Union, United Kingdom and United States on crude-oil imports from Russia and export of refined products to Europe. Reliance is currently assessing the implications, including the new compliance requirements.”
The firm emphasized commitment to full compliance with applicable regulations and indicated it will adapt its refinery operations accordingly.
Analysts estimate that the margin impact could be meaningful. The discounted Russian barrels had provided Reliance a cost advantage in its feedstock basket.
With the discount narrowing and the need to shift to alternative crude sources—potentially from West Asia or Africa—the cost base could increase, squeezing refining margins by an estimated US$3 to 5 per barrel in some scenarios.
One analyst noted that despite the discount falling to about US$2-3 a barrel versus over US$10 previously, losing access entirely or transitioning to more expensive barrels would “hit export competitiveness directly.”
A company spokesperson reiterated confidence in the company’s “time-tested, diversified crude-sourcing strategy” and said the firm expects to maintain stability and reliability in its refining operations, including exports to Europe.
However, industry sources point out that switching supply lines at scale presents challenges.
One senior executive noted that other refiners will also target the same non-Russian barrels, which could drive up the premium on alternative crude and further eat into margins.
In addition to feedstock cost risks, the sanctions may complicate trade-flows for refined products. The EU’s recent sanction package prohibits imports of refined products made from Russian crude if the crude was processed within 60 days through third-country refineries.
This could affect Reliance’s exports and logistics strategy.
Despite the uncertain outcome, Reliance has indicated it will remain aligned with Indian government guidelines on the matter.
While the company holds some inventory buffer and believes immediate margin impact may be limited, the long-term adjustment remains delicate. Reliance’s refining business contributes nearly 60 percent of its consolidated revenue, so even a moderate margin squeeze could affect profitability at scale.