Core Viewpoint - The recent U.S. sanctions against Russian oil giants Rosneft and Lukoil have led to Reliance Industries, India's largest private oil refiner, halting all purchases of Russian crude oil, marking a significant shift in its procurement strategy [1][3][29]. Group 1: Reliance Industries' Oil Procurement - Reliance Industries had significantly increased its dependence on Russian oil, purchasing approximately 629,590 barrels per day from Rosneft and Lukoil as of September 2025, which accounted for nearly half of India's total crude oil imports that month [3][5]. - In September 2024, Reliance signed a ten-year contract with Rosneft to purchase crude oil worth $12 to $13 billion annually, translating to about 500,000 barrels per day [9][12]. - The sudden halt in Russian oil procurement poses a dilemma for Reliance, as Russian oil constitutes over half of its refinery feedstock, and stopping these purchases could severely impact its profit margins [12][18]. Group 2: Market and Economic Implications - Analysts suggest that if Reliance is forced to abandon Russian oil, the financial impact may be manageable, as Russian oil profits represent only about 2.1% of the projected total EBITDA for the fiscal year 2027 [16][18]. - The price difference between Russian Urals crude and similar Middle Eastern crude has narrowed, reducing the incentive for Indian refiners to purchase Russian oil, which previously offered a discount of $8 to $10 per barrel, now reduced to $5 to $6 [20][22]. - The Indian government and state-owned refiners are also reducing their Russian oil purchases, indicating a broader trend among Indian refiners to comply with U.S. sanctions and improve trade relations with the U.S. [22][24]. Group 3: Geopolitical Context - The U.S. has previously pressured India to limit its purchases of Russian oil, and the current shift in procurement strategy may be an attempt by India to strengthen its trade relationship with the U.S. [20][22]. - The decision to halt Russian oil imports could potentially clear obstacles in U.S.-India trade negotiations, particularly in sectors like semiconductors and renewable energy [24][26]. - The market reaction to Reliance's decision has been relatively muted, with its stock price only slightly declining by 1.2% since the announcement of the sanctions, indicating investor confidence in Reliance's diversified business model [28][29].

Report Summary Investment Rating - The investment rating for the crude oil industry is to continue waiting and seeing, indicating a weak driving force [1]. Core View - The driving force for crude oil is weak, and it is recommended to continue waiting and seeing. The trend strength of crude oil is 0, indicating a neutral stance [1][8]. Summary by Directory International Crude Oil - WTI November crude oil futures closed down $0.02/barrel, a decrease of 0.03%, at $57.52/barrel; Brent December crude oil futures closed down $0.28/barrel, a decrease of 0.46%, at $61.01/barrel; SC2512 crude oil futures closed down 0.70 yuan/barrel, a decrease of 0.16%, at 438.40 yuan/barrel [1]. Crude Oil Arbitrage - **Mexico Gulf Crude Oil Arbitrage**: The arbitrage windows for Arab Extra Light, Arab Light, Nemba, Agbami, and Forties are all closed, mainly due to high costs, lack of competitiveness, and low refining profits [2]. - **Atlantic Crude Oil Arbitrage**: The arbitrage windows for Forties, Saharan Blend, and Urals are open, while that for Cabinda is closed. Urals has a significant price advantage, but there may be risks related to logistics or sanctions [4]. - **Northwest Europe Crude Oil Arbitrage**: The arbitrage windows for Eagle Ford, Azeri Light, and Saharan Blend are open, while those for WTI MEH and Bonny Light are closed. The trans - Atlantic price difference for WTI MEH is very narrow, and Bonny Light has a slight disadvantage compared to Forties [5]. - **Mediterranean Crude Oil Arbitrage**: The arbitrage windows for Saharan Blend, Azeri Light, Bonny Light, Ekofisk, and Eagle Ford are all closed because of the deep discount of Urals and high transportation costs [6]. - **Asia Crude Oil Arbitrage**: The arbitrage windows for Duri, Basrah Heavy, Napo, and Maya are all closed, mainly due to high transportation costs and low competitiveness compared to the Dubai benchmark [7]. Key Market News - On October 20, US Middle East envoys warned Israeli Prime Minister Netanyahu not to undermine the Gaza cease - fire agreement. - Russia is ready to expand cooperation with Iran in various fields. - Shanghai International Energy Exchange approved an increase in the storage capacity of Dalian North Oil Storage Co., Ltd. from 100,000 cubic meters to 200,000 cubic meters [9].