Oil refineries make millions of dollars from Ukraine crisis

Since Russia launched a military campaign in Ukraine, the US and Western countries have introduced a series of economic sanctions to pressure Moscow, many of which are aimed at oil products.

Many companies in the European Union (EU) also put Russian fuel on the restricted list.

In that context, Reliance Industries’ refinery owned by Indian billionaire Mukesh Ambani is actively buying discounted crude oil from Russia. This helped the company’s profits from some oil products increase to the highest level in the past 3 years.

Reliance Industries’ giant refineries can process around 1.4 million bpd for most crude grades. The company is also very agile in handling oil transactions, so that they profit greatly from the change in the price of fuel from Russia.

“We have minimized costs by sourcing from arbitrage oil”, said CFO V. Srikanth of Reliance Industries.

Reliance Industries data showed diesel margins increased 71% from January to March from the previous quarter, while gasoline prices increased 17% and naphtha prices increased 18.5%. The company’s earnings jumped 22% to 162 billion rupees ($2.1 billion) in the first three months of the year alone.

Mr. Srikanth said that his company’s profits can continue to increase thanks to “European imports of diesel from Russia have fallen and global oil inventories are low”. However, business may be affected by the outbreak COVID-19 in China and other supply chain issues.

Currently Reliance Industries is headquartered in Mumbai, India. About 60% of the company’s income comes from oil products.

Other Indian refineries are also stocking up on discounted Russian oil while the US and its allies reject this energy source. In particular, Russian oil brought to India was not sanctioned. Although the amount of oil imported from Russia is still very small compared to the total consumption of India, they help to contain the rapidly increasing inflation in the country.

According to Bloomberg, public and private refineries in India have purchased more than 40 million barrels of Russian crude oil since the Russia-Ukraine military conflict began in February.