More Stories

Informist, Monday, Nov. 17, 2025

 

NEW DELHI – Indian oil marketing companies are unlikely to face any significant impact on their refining margins or credit profiles from the US sanctions on Russia's major crude oil producers Rosneft and Lukoil, or from the European Union's ban on refined products derived from Russian crude oil, Fitch Ratings said Sunday. However, the scale of the impact will ultimately depend on how long the sanctions remain in place and how strictly they are enforced, it said. India is the biggest importer of seaborne Russian crude oil.

 

"Russian crude accounted about 33% of India's crude oil imports in Jan-Aug 2025 and its discounted price has provided support to Indian OMCs' EBITDA (earnings before interest, taxes, depreciation, and amortisation) and profitability," it said. Fitch expects the oil marketing companies to comply with the sanctions, in line with their public statements, but some refiners may continue to process Russian crude from unsanctioned sources.

 

India has been purchasing Russian crude at discounted prices due to sanctions by Western countries on Moscow. The Group of Seven developed nations had initially imposed a $60-per-barrel price cap on Russian crude and later imposed additional sanctions to further restrict Russia's petroleum sales. India bought Russian crude oil up to $30-a-barrel cheaper, though discounts have varied sharply over the past three years and have been at $2-$3 a barrel in recent times. The International Monetary Fund in February said India saved around $7 billion per year by importing crude oil from Russia at discounted prices.

 

Public-sector oil refining and marketing company Indian Oil Corp. Ltd.'s management had said in October that it will continue to import crude oil from Russia while also complying with the sanctions imposed by the US on Russian oil entities. Russian crude oil accounted for 18-19% of the company's total imports in the September quarter, down from 24% in the June quarter. In Jul-Sept, the state-owned company posted higher-than-expected quarterly earnings supported by the sharp fall in global crude oil prices. Its net profit jumped up several fold to more than INR 76 billion from nearly INR 2 billion a year ago, though its revenue rose just 4% on year to INR 2.03 trillion.

 

Fitch believes the sanctions will dampen global demand for products tied to affected crude, leading to wider spreads for refined products. "This should help to mitigate downward pressure on refiners' profitability as they use less discounted Russian crude, pay more for alternative supplies, and deal with more volatile shipping and insurance costs," it said. Refiners that continue to process Russian crude may enjoy wider discounts on this portion of their crude use, Fitch added.

 

The rating agency expects high spare capacity in the global crude market to help limit upward pressure on the oil companies' raw material costs, by dampening oil prices more broadly. "We assume Brent crude prices will average $65 per barrel in 2026, from $70 per barrel in 2025."

According to Fitch, private refiners with significant EU export exposure could face additional sanctions-related risks, as proving compliance with the new sanctions regime could be challenging. "It can be difficult to verify crude oil origins once different grades are blended before refining. Affected companies may opt to diversify sales to other markets, optimise their mix of different crude oil grades, or to invest in stronger compliance and traceability systems over the medium term," it said.

 

The rating agency expects lower crude costs, coupled with rising refined product demand in India and very high refinery capacity utilisation to offset risks to gross refining margins from slowing global growth, supporting mid-cycle levels of around $6 per barrel in 2026-27 (Apr-Mar). "We think marketing margins will remain steady, assuming that the authorities do not mandate lower retail prices or increase the excise duty on transport fuels," it added.  End

 

US$1 = INR 88.62

 

Reported by Priyasmita Dutta

Edited by Subhojit Sarkar

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2025. All rights reserved.