War lifts Reliance’s O2C earnings to a record

Reliance Industries’ oil-to-chemicals (O2C) business reported record quarterly earnings in the September quarter, as supply disruptions linked to the Middle East conflict tightened global fuel markets, pushed up oil and product prices, and lifted refining margins.

O2C revenue rose 44.2% year-on-year to ₹2.32 lakh crore in the second quarter of FY27, driven largely by higher energy prices. Crude oil prices increased 40.6% from a year earlier, while transportation fuel prices rose 50-78%. Prices of most downstream chemical products increased 25-35%, according to the company’s results statement.

The segment’s earnings before interest, tax, depreciation and amortisation (EBITDA) climbed 67.9% to a record ₹25,203 crore. Reliance attributed the increase to exceptionally strong transportation fuel cracks — the difference between the price of refined fuel and the cost of crude oil used to produce it — and improved downstream chemical margins.

Fuel cracks rose three to 3.7 times from a year earlier, reaching historic highs during the quarter. Disruptions to supplies through the Strait of Hormuz, refinery outages in the Middle East and Russia, and lower inventories tightened fuel availability in global markets. The company reported that Singapore-region gasoline, diesel and jet fuel cracks rose sharply year-on-year.

Higher crude and product prices also lifted revenue, but did not translate into an equivalent increase in earnings. Reliance said higher crude premiums, elevated freight rates, costs associated with the special additional excise duty (SAED) and under-recoveries in its domestic fuel retail business constrained O2C earnings growth.

The company also adjusted its crude sourcing to keep its refineries running amid disruption in the Strait of Hormuz. It said it achieved record crude runs by sourcing supplies from the affected region and other markets, including Latin America, North America and the Mediterranean. This helped limit the impact of wider Arab Gulf crude differentials and a 15-20-fold surge in freight rates, according to Reliance.

The O2C performance helped support Reliance’s wider quarterly results. Consolidated revenue rose 27.8% year-on-year to a record ₹3.62 lakh crore, while consolidated EBITDA increased 23.9% to ₹62,409 crore. The company’s results attribute the O2C revenue increase primarily to sharply higher crude and product prices, rather than to volume growth alone.

The quarter shows how supply disruptions can benefit refiners when they tighten fuel markets and increase refining margins. For Reliance, however, the earnings gain came alongside higher procurement and transportation costs, underscoring that the impact of the conflict was not uniformly positive across its operations.