US sanctions on Russian oil producers Rosneft and Lukoil, along with the European Union’s ban on refined products derived from Russian crude, are unlikely to materially affect the margins or credit profiles of India’s state-owned oil marketing companies, Fitch Ratings said, according to PTI.
However, the agency said the eventual impact would depend on the duration and enforcement of the sanctions. Russian crude accounted for around one-third of India’s imports between January and August 2025, and discounts have contributed meaningfully to OMC profitability. Fitch expects Indian refiners to comply with the sanctions, although some may continue sourcing unsanctioned grades.
India sharply increased Russian crude intake after the February 2022 invasion of Ukraine, with discounted volumes lifting Russia’s share in India’s crude basket from under 1 per cent to nearly 40 per cent within months.
Refined product spreads may offset loss of discounted crude
Fitch said sanctions-related disruptions could suppress global demand for products linked to affected crude, potentially widening refined product spreads and helping refiners offset the loss of discounted Russian barrels. Those that continue processing unsanctioned Russian crude may benefit from deeper discounts.
The agency noted that global spare crude capacity should limit upward pressure on oil prices. It forecasts Brent at $70 in 2025 and $5 in 2026.
Private refiners with exposure to EU markets may face greater compliance challenges, as crude origin becomes harder to trace when grades are blended. Such companies may adjust crude slates, redirect exports or invest in improved traceability systems.
OMC performance stable; government support boosts liquidity
Indian OMCs posted EBITDA broadly in line with or slightly above expectations in the first half of FY26, supported by softer crude and robust gasoil spreads. Gross refining margins averaged $–7 per barrel, compared with $4.5–7 per barrel in FY25.
Fitch expects GRMs to remain near mid-cycle levels of around $ per barrel in FY27, aided by firm domestic fuel demand and high utilisation rates.
A government-approved ₹30,000 crore support package for Indian Oil, Bharat Petroleum, and Hindustan Petroleum in the second quarter of FY26 will help offset under-recoveries on subsidised LPG and strengthen liquidity, the agency said.
Fitch added that the Issuer Default Ratings of all three OMCs remain supported by strong state linkages and a high likelihood of sovereign backing if required, PTI reported.
