Indian oil refiners expect healthy margins amid global supply disruptions
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A combination of these factors offer Indian refiners an opportunity to capitalise on stronger diesel, gasoline and aviation turbine fuel (ATF) cracks. Reliance Industries (RIL), Bharat Petroleum Corporation (BPCL), Indian Oil Corporation and Hindustan Petroleum Corporation (HPCL) reported record refining performances in the September quarter (Q2) and expect the run to continue.
Mumbai: Oil refiners expect healthy margins in the coming months as disruptions to refining capacity in West Asia and Russia, depleted fuel inventories, and tight product supplies continue to support global fuel prices.A combination of these factors offer Indian refiners an opportunity to capitalise on stronger diesel, gasoline and aviation turbine fuel (ATF) cracks.
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Reliance Industries (RIL), Bharat Petroleum Corporation (BPCL), Indian Oil Corporation and Hindustan Petroleum Corporation (HPCL) reported record refining performances in the September quarter (Q2) and expect the run to continue.
However, higher crude premiums, freight and insurance costs, along with domestic fuel pricing constraints, could limit their gains.
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RIL said global refining runs had declined to around 79% against 82% pre conflict, while diesel and gasoline inventories remained below their five-year averages. Refinery outages, which had reached nearly 11.8 million barrels per day at their peak, were still estimated at 4-5 million barrels per day, supporting product prices. "These factors, combined with uncertainty around Russian refinery operations and Chinese product exports, are expected to keep refining margins supported," RIL said.
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RIL's oil-to-chemicals (O2C) business emerged as the biggest driver of its fiscal Q2 earnings, reporting a 68% surge in Ebitda to a record Rs 25,203 crore. O2C revenue grew 44% to Rs 231,601 crore, led by high energy prices.
The geopolitical impact is particularly visible in product cracks. Gasoline cracks had nearly tripled year-on-year (YoY), while diesel cracks were around 3.5 times and ATF cracks 3.7 times their levels in Q2 last year. Cracks are the price difference between a barrel of crude oil and the refined product.
Gasoline cracks increased from an average of $8.4 per barrel to nearly $25 per barrel, while gas oil cracks rose from $18.7 to $65.8 and ATF cracks from $16 to $59.3.
Following the onset of West-Asia conflict towards the end of February 2026, global crude oil prices witnessed a 41% YoY rise in crude oil prices and a 50-78% jump in transportation fuel prices.
The Indian basket crude price, which averaged around $65 to $70 per barrel in February remained above the $100 per barrel mark during most of Q1 FY27.
During Q2, however, crude oil prices remained relatively moderate, with the Indian average basket largely ranging between $85 to $95 per barrel during July and August before witnessing renewed upward pressure and escalating geopolitical tension in September.
Refiners also diversified their sourcing from geographies like Russia, Americas, Venezuela, Brazil and even some from African countries, thereby ensuring continuity of crude oil imports. This flexibility helped them maintain record crude processing levels-above 100%-despite shipping disruptions.
State-run BPCL reported a gross refining margin (GRM) of $32.53 per barrel in the September quarter, which declined to around $14 per barrel after adjusting for the special additional excise duty (SAED).
VRK Gupta, director of finance, BPCL, said the company's refining performance was supported by strong diesel and ATF cracks.
During Q2, BPCL's refineries processed 10.4 million tonnes of crude, operating at 117% of their combined capacity. However, higher crude freight costs and the loss of discounts on Russian crude weighed on margins compared with Q1.
State-run HPCL also reported a sharp recovery in refining profitability, with its GRM rising to $32.15 per barrel before SAED in the September quarter, compared with $8.79 per barrel in the previous financial year.
IOCL's GRM stood at $36.67 per barrel and after adjusting SAED, it was around $18.52 per barrel.
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Figures reflect the source report and its stated period. This article is for information and is not investment advice.
