Reliance Turns to American Crude amid Middle East Disruptions
OIL & GAS

Reliance Turns to American Crude amid Middle East Disruptions

Reliance Industries broadened its crude procurement and adjusted product exports during the July-September quarter as disruptions in the Middle East affected global oil flows. The company’s response included sourcing feedstock from new regions, managing shipping costs and placing refined products in markets offering stronger returns.

Reliance supplied high-speed diesel and motor spirit to its Jio-bp retail outlets, industrial customers and public-sector oil marketing companies facing product shortages. The supplies helped meet domestic fuel requirements without requiring imports, while the company continued operating its refineries amid uncertainty in international crude trade.

Restrictions affecting the Strait of Hormuz and the temporary shutdown of Saudi Arabia’s East-West pipeline constrained crude movement during the quarter. Reliance also faced higher freight rates and a wider price differential for Arab Gulf crude, increasing the logistical and commercial challenges associated with feedstock procurement.

To maintain refinery operations, Reliance sourced crude from Latin America, North America and the Mediterranean in addition to its traditional supply routes. The company did not disclose the volumes obtained from each region or their share of its overall crude basket, but the wider sourcing network reduced its dependence on individual routes during the disruption.

Reliance also changed the geographical distribution of its petroleum product exports. It directed light distillates to East and South Africa, while middle distillates were sent to Europe, Latin America and West Africa according to market returns. Transportation-fuel cracks rose to between 3 and 3.7 times their levels in the corresponding period a year earlier, reaching historic highs. Fuel cracks measure the difference between refined-product prices and crude costs, although refining profitability also depends on freight, product mix and operating expenses. The company reported improved margins in parts of its downstream chemicals business, which includes refining and petrochemical production.

Reliance Industries broadened its crude procurement and adjusted product exports during the July-September quarter as disruptions in the Middle East affected global oil flows. The company’s response included sourcing feedstock from new regions, managing shipping costs and placing refined products in markets offering stronger returns. Reliance supplied high-speed diesel and motor spirit to its Jio-bp retail outlets, industrial customers and public-sector oil marketing companies facing product shortages. The supplies helped meet domestic fuel requirements without requiring imports, while the company continued operating its refineries amid uncertainty in international crude trade. Restrictions affecting the Strait of Hormuz and the temporary shutdown of Saudi Arabia’s East-West pipeline constrained crude movement during the quarter. Reliance also faced higher freight rates and a wider price differential for Arab Gulf crude, increasing the logistical and commercial challenges associated with feedstock procurement. To maintain refinery operations, Reliance sourced crude from Latin America, North America and the Mediterranean in addition to its traditional supply routes. The company did not disclose the volumes obtained from each region or their share of its overall crude basket, but the wider sourcing network reduced its dependence on individual routes during the disruption. Reliance also changed the geographical distribution of its petroleum product exports. It directed light distillates to East and South Africa, while middle distillates were sent to Europe, Latin America and West Africa according to market returns. Transportation-fuel cracks rose to between 3 and 3.7 times their levels in the corresponding period a year earlier, reaching historic highs. Fuel cracks measure the difference between refined-product prices and crude costs, although refining profitability also depends on freight, product mix and operating expenses. The company reported improved margins in parts of its downstream chemicals business, which includes refining and petrochemical production.

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