🔹 Strong Margins for indian Refineries Despite Sanctions
A new Fitch Ratings report states that indian oil marketing companies (OMCs) will continue to maintain strong refining margins, despite US sanctions on Russian oil.
Refining margins for the first half of FY2026 ranged between $6–$7 per barrel, slightly better than the previous year.
Profits for IOC, BPCL, and hpcl remained in line with expectations due to low crude prices and favourable gas oil prices.
🔹 Impact of US Sanctions on Russia
The US imposed sanctions on Russian oil giants Rosneft and Lukoil, while the EU continues its ban on imports of refined products derived from Russian crude.
Fitch expects the sanctions to have minimal impact on the margins or credit profiles of indian OMCs.
However, the extent of impact will depend on duration and strictness of sanction enforcement.
🔹 Russia’s Key Role in India’s Crude Supply
Russia supplied nearly 33% of India’s crude oil imports between january and august 2025.
Deep discounts on Russian crude significantly boosted the EBITDA and profitability of indian refiners.
A drop in global demand for Russian oil-linked products could create price variations in refined output.
🔹 Opportunities and Challenges for Refiners
If demand falls for Russian-origin products, indian refineries may face lowerdiscount availability, higher shipping costs, and greater price volatility.
Refineries continuing to buy unapproved Russian crude may receive even deeper discounts, but at higher compliance risks.
Private refiners exporting heavily to europe could face regulatory challenges, as blended crude makes tracing origins difficult.
These refiners may need to diversify export destinations, adjust crude blends, or improve compliance systems.
🔹 oil Price Outlook and government Support
Fitch expects Brent crude to average around $65 per barrel in 2026, compared to $70 in 2025.
Stable or lower oil prices will help keep OMC operating costs under control.
The indian government approved a ₹300-billion support package for IOC, BPCL, and hpcl to offset LPG under-recoveries in Q2 FY2026.
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