- India's oil firms face risks from US tariffs targeting major Russian crude buyers
- Russian crude is key to India's supply amid tight global alternatives and Middle East issues
- Saudi Arabia paused some crude deliveries due to pipeline damage, aiming to restore soon
The latest US move targeting buyers of Russian crude is putting India's oil marketing companies back in focus, with investors assessing what a reduction in Russian supplies could mean for crude costs, refining margins and earnings.
The Lindsey Graham Sanctioning Russia and Iran Act of 2026, signed into law by US President Donald Trump on September 18, authorises tariffs of up to 100% on countries among the largest buyers of Russian energy. India is among the countries that could potentially face the measures.
Russian crude remains an important part of India's supply mix, even as disruptions in the Middle East have complicated alternative sourcing. Industry executives have warned that replacing Russian barrels could prove difficult and expensive given tight global supplies.
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The pressure is not limited to Russian supply; Saudi Arabia has halted October crude deliveries to at least two European refiners following damage to its East-West pipeline, while the kingdom has been redirecting flows through alternative routes. Saudi Aramco is targeting a partial restart of the pipeline within days and a return to full capacity within around six weeks.
IOCL, BPCL, HPCL Earnings Sensitivity
According to the ICICI Securities estimates cited in the market discussion, Indian Oil Corporation (IOCL) could have around 50% Russian crude exposure, with a potential Rs 2.1 - 4.2 per share EPS hit if Russian crude supply is reduced and replacement costs rise.
For BPCL, with around 40% exposure, the estimated EPS impact is Rs 2.9 - 5.9 per share. HPCL, with around 10% Russian crude exposure, could see a relatively lower impact of Rs 1 - 1.9 per share.
The actual impact, however, will depend heavily on how much Russian crude gets displaced and at what replacement price. Refining margins could also provide some cushion. Higher diesel and jet-fuel cracks may partially offset an increase in crude procurement costs, while government intervention on retail fuel prices remains another important variable.
Meanwhile, oil prices have remained volatile rather than simply moving higher. Brent crude fell about 2% on Monday as concerns around Saudi supply disruptions eased and the kingdom worked to restore pipeline capacity.
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