India-US trade deal 'incrementally' positive for RIL, says Nomura

India-US trade deal is incrementally positive for Reliance Industries as it will reopen access to European Markets due to the availability of Venezuelan crude.

Nomura on RIL: The much-awaited trade deal between India and the US will likely be 'incrementally' positive for Reliance Industries (RIL), expect analysts at Nomura. The deal, which was finalised Monday night, following months of negotiations, said that India will buy more oil from the US, potentially Venezuelan oil. 

The Venezuelan crude oil will likely be available to Reliance Industries at discounts, which is a positive, as the refiner has stopped taking Russian crude oil to its export facility, Nomura noted. 

 

"That apart, the availability of Venezuelan oil will open European markets for Reliance Industries which was facing issues earlier in accessing the European markets due to Russia-sourced oil," it noted.  On the bourses, Reliance Industries share price gained 1.8 per cent intraday, having added 4.26 per cent in two days. By comparison, the Nifty 50 index was up 0.16 per cent at 10:18 AM.   CATCH STOCK MARKET UPDATES TODAY LIVE

 

Nomura view on Indian OMCs after India-US trade deal

Apart from RIL, analysts at Nomura see other Indian oil marketing companies (OMCs) also benefitting from the access to Venezuelan crude. The gains, however, may not be more lucrative than processing Russian crude, given higher logistics and processing costs, Nomura said. 

 

As Venezuelan crude falls under a very heavy category, refining it is more difficult than refining Russian Urals. Among major importers, only the US, China, and India can process it, the brokerage said. 

 

Moreover, Venezuelan export volume is much lower than that of Russia. The Venezuelan export volume is less than 1 million barrels per day versus 4–5 million barrels per day export volume from Russia.

 

"It may take many years to ramp up production from current levels. Hence, we will closely track how much volume of Venezuelan crude Indian refiners are able to get," Nomura added.  ALSO READ | Avanti Feeds up 35% in 2 days, stock hits new high after 8 yrs; here's why 

Indian oil refiners are finding the current offers for Venezuelan Merey crude at $5-per-barrel discount to Brent on a delivered basis uneconomical. The discounts should be increased to at least $10 per barrel to make the process of Merey crude economically feasible for Indian refiners, Nomura said, citing Argus data.

 

Meanwhile, discounts on Russian Urals are at over $11 per barrel versus Brent on a delivered basis, which is the widest since June 2023 as Reliance Industries retreated from the markets, the brokerage said.  Reflecting the views, Hindustan Petroleum Corporation and Bharat Petroleum Corporation shares were trading 2.91 per cent and 2.33 per cent higher, respectively. 

   

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