Oil & Gas

Reliance Industries, India’s largest oil refiner, is expected to report a decline in profits for the quarter ending in March. The drop is mainly attributed to rising oil prices linked to the conflict in the Middle East. According to a Reuters poll of brokerages, quarterly profits could fall by about 3.7% compared to last year, even as revenues are projected to increase by roughly 8.1%.

Analysts note that while refiners typically benefit from higher refining margins (cracks), increased crude premiums and operating expenses are offsetting those gains. Experts from JPMorgan Chase highlighted that these rising costs could significantly weigh on earnings, creating uncertainty for the sector.

At the same time, Jefferies pointed out challenges within Reliance’s oil-to-chemicals division. Higher crude prices, elevated freight costs, and increased output of less profitable liquefied petroleum gas (LPG) are all expected to negatively affect performance. This is particularly relevant in India, where about 60% of households depend on LPG for cooking, making supply disruptions highly impactful.

The situation has been worsened by constraints at the Strait of Hormuz, a critical route for around 90% of India’s LPG imports. Meanwhile, Reliance’s shares have fallen about 8% since its last earnings report in January. Even before the current conflict, the company faced pressure after U.S. sanctions affected its dealings with Rosneft, a key supplier tied to its Jamnagar refinery, adding further strain to its operations.