Fresh US sanctions on Russian oil may hit GRMs of Indian refiners

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Subscribe to enjoy similar stories. New Delhi: Gross refining margins of Indian oil refiners are likely to shrink going ahead post fresh sanctions on two Russian oil producers and nearly 200 crude-carrying vessels, according to sector experts. Buyers of cheap Russian oil may now have to look at other sources of oil which are unlikely to be offered at discounts, they said.

"Due to the sanctions, oil companies may have to look at other sources of oil, which may not come with discounts. This would increase the cost and eventually shrinkrefining margins of the refineries. Although the overall import bill of the country is unlikely to see a major hit, the GRMs may somewhat decline" said Prashant Vasisht, senior vice president and co-group head, corporate ratings, Icra.

As Russian discounts fall to below $5 per barrel, GRMs of India public sector OMCs have already declined by about 80% in FY25 from the highs recorded in FY24. Discounts on Russian oil are currently around $2.5-4 per barrel, compared with around $6 per barrel a year ago. According to data from the Petroleum Planning & Analysis Cell (PPAC), in the first half of FY25 the refining margins of Mangalore Refinery and Petrochemicals Ltd, a public sector enterprise under the Union petroleum ministry and a subsidiary of Oil and Natural Gas Corp.

Ltd (ONGC) declined as much as 80.17% to $2.56 per barrel from $12.91 in the same period last fiscal. State-run IOCL’s GRM in April-September stood at $4.08 per barrel, compared with $13.12 a barrel during the corresponding period of the last fiscal, registering a decline of 68.90%. The other public sector oil majors Bharat Petroleum Corp.