Crude shock, higher premiums hit Reliance O2C margins as Iran war disrupts supply chains

Reliance Industries Limited on Friday flagged a “sharp rise in crude premiums on physical barrels” and elevated freight and insurance costs as key factors weighing on its Oil-to-Chemicals (O2C) performance in the March quarter, even as global refining margins remained strong amid disruptions linked to the West Asia conflict.

The company said multiple cost pressures, including “higher fuel cost”, “reintroduction of SAED on exports”, and “weak polymer deltas”, constrained margin capture, leading to a 3.7% year-on-year decline in quarterly O2C EBITDA despite robust transportation fuel cracks.

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Segment revenue rose 12.4% YoY to ₹1.85 lakh crore in Q4, primarily driven by a 12% increase in crude oil prices and higher domestic fuel retail volumes, the company said.


“The war in West Asia has led to unprecedented dislocation in global supply chains," Chairman and Managing Director Mukesh D. Ambani said.

“As in prior periods of disruption, Reliance has again demonstrated its commitment to ensure availability of critical energy and materials to India," he added.

The company noted that crude markets turned sharply volatile toward the end of the quarter, with prices rising in March due to heightened geopolitical tensions and disruptions to crude and product flows through the Strait of Hormuz, a key global energy chokepoint.

Even as refining margins surged: with middle distillate cracks jumping sharply following the outbreak of the Middle East conflict , Reliance said margin realisation remained challenging due to higher input and logistics costs as well as policy interventions.

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To manage the supply shock, the company undertook operational adjustments, including diverting feedstock to boost LPG output and prioritising domestic energy supply, which also impacted profitability.

On a full-year basis, the O2C segment reported 10.1% growth in EBITDA to ₹60,546 crore, supported by stronger fuel cracks, though earnings were partly constrained by weak downstream chemical margins and disruptions caused by the Middle East conflict.

The company also flagged continued pressure in the chemicals business, where oversupply and weak global demand kept polymer margins subdued, further weighing on overall segment profitability.