Russian Oil Sanctions Threaten OMC Margins: GRMs May Dip by $1–1.5/bbl

Russian Oil Import Risk May Hit Indian OMCs' Margins a potential cut in Russian crude imports due to US pressure and secondary sanctions could reduce GRMs (Gross Refining Margins) by $1–1.5/bbl for Indian refiners. Why it matters? Russian oil, which formed just 1.5% of India's crude imports till FY22, now contributes over 33% in FY24–FY25, offering significant discounts of $3–4/bbl. This helped stabilize GRMs during high crude price phases. Impact on Earnings: A $1/bbl decline in GRM could dent: -> OMCs’ EBITDA by 8–10% -> MRPL/CPCL by 20–25% -> RIL (Reliance) marginally by ~2% State-run refiners have already halted some Russian oil purchases amid narrowing discounts and sanctions risk. Tankers are reportedly idling off India's west coast. Crude Price Outlook: If India stops Russian crude purchases, global crude could spike—unless offset by China or other buyers. However, rising global supply (2.1 mmbpd in CY25) and Saudi spare capacity (2 mmbpd) may cap prices. Govt's stance: MEA clarified that India’s energy imports are driven by market needs, not US pressure. Stocks to Watch:

CPCL – High sensitivity to GRM decline , HPCL – Moderate downside risk RIL – Resilient due to diversified refining margin