New Delhi: Reliance Industries’ Oil-to-Chemicals (O2C) profitability has minimal dependence on Russian crude (2 per cent of consolidated Ebitda) as discounts are largely negated by higher logistics and insurance costs, according to a report by Jefferies.
Reliance Industries’ Oil-to-Chemicals (O2C) profitability in the first half of 2026 is tracking a strong 15 per cent year-on-year growth, well ahead of the full-year forecast of 8 per cent, supported by strength in auto fuels, the report said.
The report added that the European diesel spreads remain firm in QTD2Q (Quarter-To-Date for the Second Quarter), supported by lower imports following the European Union’s ban on refined products made from Russian crude.
The report says that the inventories are below the five-year average, and Reliance has the flexibility to produce diesel from Middle Eastern crude for EU exports. Gasoline margins are also firm, with US inventories around their five-year average.
Refining profitability is aided by refinery closures, with permanent shutdowns totalling 1.1 million barrels per day in CY25–more than the combined closures in CY23-24. Net capacity additions of 0.5 million bpd in CY25 are expected to lag behind projected demand growth of 0.7 million bpd.
Petrochemical spreads are currently range-bound, with QTD spreads flat quarter-on-quarter and slightly above the decade lows seen in 4QFY25. Recent PE and PP capacity closures in Asia could support margins, and China’s anti-involution policy may further aid spread recovery in the medium term.
QTD2Q O2C profitability is up 20 per cent year-on-year, improving visibility on FY26E O2C EBITDA estimate of Rs 594 billion, reflecting 8 per cent growth, the Jefferies report said.
Jefferies said that diesel strength was a key contributor to the O2C EBITDA improvement in FY23-24, although a sharp drop in diesel spreads and narrower crude discounts led to a decline in FY24-25.
The benefit from Russian crude is estimated at around USD 1.0-1.2 per barrel in refining, translating to approximately USD 500 million in annual EBITDA, the report added.
The report further highlighted that Reliance has maintained compliance with Western sanctions on Iranian and Venezuelan crude and is expected to do the same in the event of sanctions on Russian crude, which could have inflationary implications for global oil prices.
