• Reliance Industries faces a potential earnings hit due to US sanctions on Russian oil suppliers Rosneft and Lukoil.
• Following sanctions, Reliance has begun sourcing crude from the Middle East and the US to offset declining Russian supplies.
• Reliance confirms it will comply with Western sanctions while maintaining relationships with current suppliers.

The recent sanctions imposed by US President Donald Trump on two major Russian oil suppliers, Rosneft and Lukoil, are expected to have a significant impact on India's private sector refineries, especially Reliance Industries Ltd (RIL). The sanctions could reduce Reliance's earnings before interest, tax, depreciation, and amortization (EBITDA) by approximately ₹3,000-3,500 crore. Historically, the company has relied heavily on Russian crude, which accounted for about 20-25% of its operations, but is now forced to seek alternative sources amid these sanctions, according to Indiatimes and Al Jazeera.

In response to these sanctions, Reliance has begun purchasing crude oil from alternative sources, including the Middle East and the US, to mitigate the impact of reduced Russian oil availability. This pivot is seen as critical, especially as Reliance has emerged as India's largest importer of Russian oil this year, acquiring millions of barrels just before the sanctions were announced. Particularly, the company has sourced significant volumes from Saudi Arabia, Iraq, and the US while evaluating deals in the spot market, according to Indiatimes and Reuters.

Reliance is committed to adapting its operations to comply with the new restrictions caused by sanctions while still maintaining supplier relationships. The company's spokesperson stated they will address evolving market and regulatory conditions thoughtfully, indicating compliance with EU directives concerning Russian oil, particularly as the EU will restrict imports from companies linked to Russian crude processing, according to Al Jazeera and Reuters.

As RIL navigates these sanctions, the broader Indian oil market faces pressures as well, particularly government-operated firms that might experience heightened risks due to a drop in crude supply. Analysts note that these entities could see their earnings diminish significantly in light of sanctions and additional price increases, raising concerns for the overall stability of India's crude imports, according to Indiatimes and Indiatimes.