Reliance looks to Latin America, North America and the Mediterranean as Middle East oil disruptions put supply chains under pressure

Reliance Industries diversified its crude oil sourcing and redirected petroleum product exports to alternative overseas markets during the July-September quarter, as disruptions in the Strait of Hormuz and tighter crude supplies in the Middle East affected global energy markets, the company said in its quarterly media release on Friday.

The company said it sourced crude oil from Latin America, North America and the Mediterranean to sustain refinery operations during the disruptions. It also redirected light distillates to East and South Africa, while middle distillates were shipped to Europe, Latin America and West Africa, depending on market returns.

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Reliance said it supplied high-speed diesel (HSD) and motor spirit (MS) to its Jio-bp retail outlets, industrial customers and public-sector oil marketing companies facing product shortages. According to the company, these supplies helped meet domestic demand without resorting to imports. The release, however, did not specify the volumes supplied or quantify Reliance’s contribution to India’s overall fuel requirements.

The company attributed the pressure on crude supply to disruptions in the Strait of Hormuz and a temporary shutdown of Saudi Arabia’s East-West pipeline. It also cited a sharp rise in freight rates and a wider price differential for Arab Gulf crude, adding to the challenges of securing and transporting feedstock.

Reliance said its diversified sourcing strategy helped it maintain crude processing during the quarter and limit the impact of higher transportation costs and the wider Arab Gulf crude differential.

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The disruption also affected refining economics. Reliance said transportation-fuel refining margins strengthened during the quarter, with fuel cracks rising to three to 3.7 times their year-earlier levels and reaching historic highs. The company also reported improved margins in parts of its downstream chemicals business.

The company said it redirected exports towards markets offering better net returns, sending light distillates to East and South Africa and middle distillates to Europe, Latin America and West Africa.

Reliance’s oil-to-chemicals business includes refining crude oil into fuels and producing chemical products. The company said the quarter’s market conditions benefited its refining margins, even as geopolitical disruption, crude sourcing and freight costs created operational challenges.