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Reliance Industries Ltd. Has warned that a global recession can injure the oil refining margin, marking the possibility of more pain ahead after the owner of the largest purification complex in the world posted a lower profit than estimates.
“Recession concerns overtaking the fundamental oil market, producing lower prices and margins,” said Head of Finance of Reliance V. Srikanth in post-Friday revenue calls.
He added that although there was a lot of highlighting the profit of the fortune of incompatizing for oil references such as Reliance, there were also several headwinds such as higher operational costs due to soaring transportation and input prices. The cost of raw materials jumped 76% in the June quarter.
The International Monetary Fund will cut the prospects for its global economic growth “substantially” in the next update later this month, according to Ceyla Pazarbasioglu, Director of Strategy, Policy, and his review. Soaring the price of food and energy, slowing the flow of capital to the developing country, the ongoing pandemic and the slowdown in China made it “far more challenging,” he said.
The price of crude oil has slipped in the last two weeks and if it falls this week, it will be a third weekly decline – the longest decline this year – especially because of concerns that global slowdown can reduce fuel demand.
In recent months, the Reliance purification business has been encouraged for securing a cheaper Russian oil that is shunned by Western buyers in the midst of the ongoing war in Ukraine. It was then exported at a higher price and pocketed a healthy profit. The benefits are now eroded.
On July 1, India slapped the fuel export tax and crude oil production to take advantage of the fortune of support from the soaring price but cut it this week. Srikanth said this tax would reduce fuel exports from the country.
