Motilal Oswal Financial Services has reiterated a BUY call on Reliance Industries with a target price of Rs 1,750, implying a potential upside of around 26 percent from the current market price of Rs 1,392. The brokerage argues that global geopolitical disruptions—particularly around the Strait of Hormuz—are tightening energy markets and boosting refining margins. This environment could significantly benefit Reliance Industries’ Oil-to-Chemicals (O2C) business. Elevated refining spreads, supply chain disruptions, and strong petrochemical pricing may lift earnings momentum over the coming quarters. If current market disruptions persist through the first half of FY27, analysts estimate a potential 8.5 percent upside to EBITDA forecasts, reinforcing the brokerage’s bullish stance on India’s largest conglomerate.

Geopolitical Chaos Could Strengthen Reliance’s Core Energy Business

Global energy disruptions are tightening supply chains and pushing refining margins higher. A major geopolitical flashpoint has emerged around the Strait of Hormuz—a strategic waterway responsible for roughly 20 percent of global crude oil and LNG flows. Recent tensions in the region have begun to disrupt supply chains, tightening global energy markets.

These disruptions have already triggered a surge in refining margins across key petroleum products. Refining spreads for diesel, gasoline, and jet fuel have surged dramatically in recent weeks, with margins rising far above historical averages. As a large integrated refiner with significant export capabilities, Reliance Industries stands to benefit directly from this tightening market environment.

In March 2026, refining cracks averaged approximately USD42 per barrel for diesel, USD16 per barrel for gasoline, and USD58 per barrel for jet fuel—representing increases of 147 percent, 40 percent, and 124 percent respectively above long-term averages. Such elevated spreads are highly supportive of refinery profitability and could materially lift earnings for Reliance’s O2C segment.

Supply Shock Across Global Energy Markets

Multiple disruptions are simultaneously constraining global oil and refined product supply.

Four major structural shocks are tightening global fuel markets:

• Strait of Hormuz supply disruption: Nearly one-fifth of global oil supply passes through this route. Any disruption significantly alters global supply balances.

• Refinery outages across the Middle East: Operational disruptions at refineries in Saudi Arabia, the UAE, Bahrain, and Kuwait have temporarily removed several million barrels per day of refining capacity from the market.

• Chinese export restrictions: China has reportedly curtailed gasoline and diesel exports, removing additional supply from the international market.

• Surging shipping costs: Crude tanker freight rates have surged to decade highs due to disruptions in shipping routes, raising the delivered cost of crude oil globally.

These overlapping shocks are creating a structurally tighter refined products market, supporting elevated margins for large refiners like Reliance Industries.

Refining Margins Could Drive Earnings Upside

Reliance’s O2C division is highly sensitive to refining margin movements.

According to industry estimates, every USD1 per barrel increase in the gross refining margin (GRM) can raise Reliance’s consolidated EBITDA by roughly 2.5 percent. The recent surge in refining spreads therefore has meaningful implications for the company’s earnings outlook.

Additionally, petrochemical markets are experiencing similar upward pressure. Prices of key petrochemical products such as polyethylene (PE) and paraxylene (PX) have risen by roughly 10–15 percent month-on-month. These increases are driven by supply disruptions in feedstocks and refinery outages across the Middle East.

Reliance’s diversified feedstock mix further strengthens its competitive position. The company relies on a combination of ethane, refinery off-gases, and naphtha—limiting exposure to volatile crude oil prices and protecting petrochemical margins.

If current disruptions continue into the first half of FY27, analysts estimate that Reliance’s O2C EBITDA could increase by nearly Rs 170 billion, implying approximately 8.5 percent upside to FY27 consolidated EBITDA projections.

Lessons from Past Energy Crises

History suggests refining margins can remain elevated for extended periods.

Energy markets often take years—not months—to rebalance following geopolitical disruptions. The Russia-Ukraine conflict provides a useful precedent. Following Russia’s invasion in 2022, global refining margins remained elevated for nearly two years as supply chains adjusted.

During that period:

• Global diesel markets experienced severe shortages
• Singapore refining margins surged to double historical averages
• Oil refiners worldwide recorded record profitability

Reliance Industries experienced strong O2C performance during FY23 and FY24 amid that disruption cycle, with consolidated EBITDA from the segment rising substantially despite relatively flat production volumes.

A similar pattern may unfold if the current Middle East tensions persist, suggesting sustained margin strength for integrated refiners.

Strategic Feedstock Flexibility Strengthens Reliance’s Position

The company’s ability to source crude from multiple geographies provides a competitive advantage.

Reliance maintains strong operational flexibility in crude sourcing. While the company has recently reduced imports of Russian crude, the possibility of resuming such imports remains open following temporary waivers from regulatory authorities.

Additionally, Venezuelan crude exports are gradually returning to global markets after partial sanctions relief. Reliance’s refineries are capable of processing Venezuelan crude, which historically accounted for up to 20–25 percent of the company’s crude sourcing.

This flexibility ensures that Reliance can optimize crude sourcing even during periods of supply disruption—helping preserve refining margins.

Risks: Export Duties Could Cap Margin Upside

Government policy remains a potential constraint on refining profitability.

A key downside risk identified by analysts is the potential re-introduction of export duties on refined petroleum products. In 2022, the Indian government imposed the Special Additional Excise Duty (SAED) on fuel exports to curb domestic price inflation.

If similar export restrictions are introduced again, refining margins could be capped despite strong international pricing. Such policy intervention would limit the upside potential for Reliance’s O2C segment.

Valuation Breakdown and Target Price

The brokerage values Reliance Industries using a Sum-of-the-Parts (SoTP) methodology.

The valuation incorporates contributions from the company’s diversified business segments including energy, telecom, retail, and emerging new-energy operations.

Investment Outlook

Reliance Industries remains a strategic long-term play across multiple sectors.

With diversified exposure spanning energy, telecommunications, retail, and emerging clean-energy initiatives, Reliance remains one of India’s most structurally advantaged companies.

Near-term upside is likely to be driven by refining margin expansion amid global energy disruptions. Meanwhile, medium-term growth will be supported by continued expansion of Jio’s digital ecosystem, retail dominance, and investments in renewable energy.

At the current price of Rs 1,392 and a target price of Rs 1,750, the brokerage’s BUY recommendation reflects strong conviction that the company is well-positioned to benefit from global market volatility while continuing to build long-term value across its diversified portfolio.