Why India’s Top Private Refiner Is Ditching Russian Oil in 2025 (And What It Means for Global Markets)

Reliance’s Russian Oil Gamble: From Boom to Bust

Just a year ago, Reliance Industries was guzzling Russian crude like there was no tomorrow. In September 2024, the conglomerate imported a staggering 630,000 barrels per day from Rosneft and Lukoil—nearly 40% of India’s total Russian oil imports. Fast forward to 2025, and the party’s over. U.S. sanctions have forced Reliance to rethink its strategy, leaving its lucrative long-term deals with Russian suppliers in limbo. As Pankaj Srivastava of Rystad Energy puts it: “Losing Russian crude means Reliance’s refining margins will take a $5–6 per barrel hit. That’s real money.”

How U.S. Sanctions Forced Reliance’s Hand

The Treasury Department’s latest sanctions—framed as a response to Russia’s “lack of serious commitment” to ending the Ukraine war—didn’t explicitly target Indian refiners. But the message was clear: Washington expects allies to distance themselves from Moscow. Reliance, which signed a $12–13 billion decade-long deal with Rosneft in late 2023, now faces a brutal choice. Muyu Xu from Kpler notes: “Replacing 500,000 daily barrels of discounted Urals crude won’t be smooth. Middle Eastern alternatives cost more, and Reliance’s bottom line will bleed.”

The Financial Domino Effect

Let’s talk numbers. Russian oil contributed just 2.1% to Reliance’s projected ₹2.05 trillion ($22.8 billion) EBITDA for fiscal 2027—seemingly small, but critical in a low-margin business. For context, Reliance’s oil-to-chemicals division hauled in ₹295 billion ($3.5 billion) in H1 2026, while its telecom and retail arms combined for ₹500 billion. Now, with Urals crude trading $5–6 cheaper than Middle Eastern grades, every replacement barrel erodes profits. Jefferies analysts call the impact “manageable but painful.”

Geopolitical Silver Lining: A U.S.-India Trade Deal?

Here’s the twist: Ditching Russian oil might pay off geopolitically. India’s reliance on discounted crude had long irked Washington—remember Trump’s 50% tariffs on Indian goods? Now, with both state-run and private refiners cutting Russian imports, the path to a favorable U.S. trade deal looks clearer. Trinh Nguyen of Natixis sees opportunity: “The arbitrage advantage of Russian crude is fading. India can pivot to stronger Western ties without major supply shocks.”

Market Realities: Who Fills the Gap?

Vandana Hari of Vanda Insights calls India’s Russian oil binge “opportunistic buying.” In 2024, India snapped up 38% of Russia’s global exports (second only to China’s 47%). But adaptability is key. Refineries can switch to pricier West Asian, Brazilian, or Guyanese crude—though Hari warns of “margin compression.” Meanwhile, with WTI crude hovering at $61.83 (well below 2023’s $70–80 range), the sticker shock won’t be as severe as feared.

The Bottom Line

Reliance’s retreat from Russia marks a seismic shift. Short-term pain? Absolutely. But long-term, it could cement India’s position in the U.S.-aligned energy order. As one Mumbai trader quipped: “Sometimes you save money by paying full price.”

FAQs: Your Burning Questions Answered

Why is Reliance reducing Russian oil imports?

U.S. sanctions pressure and geopolitical tensions have made Russian crude riskier. Reliance is pivoting to avoid secondary sanctions.

How will this impact Reliance’s profits?

Analysts estimate a 2–3% EBITDA hit in 2025–26 due to higher replacement costs for Russian crude.

Could this lead to a U.S.-India trade deal?

Possibly. Reducing Russian oil dependence removes a key friction point in bilateral trade negotiations.