New Delhi: India’s export of refined fuels, particularly diesel, to the European Union (EU) has surged by 58 pc in the first three quarters of 2024, driven largely by discounted Russian crude oil. This uptick comes despite Western sanctions targeting Russian crude, which were introduced in December 2022, and reflects India’s growing role in global oil markets as the second-largest buyer of Russian crude oil since the Ukraine war began.
The EU and G7 countries imposed a price cap and an embargo on Russian crude oil exports to curb funding for Russia’s invasion of Ukraine. However, there was a significant loophole in the sanctions: while crude oil imports from Russia were restricted, there were no direct prohibitions on refined products made from Russian crude. This allowed non-sanctioning countries like India to buy Russian crude at a discounted price, refine it, and legally export the resulting products—such as diesel and jet fuel—to the EU and other countries.
India’s Fuel Exports to EU Surge as Refineries Capitalize on Discounted Russian Crude
India has increasingly capitalized on this refining loophole. In 2024, India’s fuel exports to the EU have nearly doubled from pre-war levels, with refineries such as Reliance Industries' Jamnagar, Nayara Energy’s Vadinar, and Mangalore Refinery and Petrochemicals Ltd (MRPL) being key contributors. These refineries, which have become more dependent on Russian crude, have been able to meet Europe’s demand for diesel and other refined products, benefitting from the price cap that has made Russian crude more attractive due to its discounts.
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As of 2024, India imports nearly 40 pc of its oil from Russia, up from less than 1 pc before the war. In particular, Russian Urals crude is now sold at a significant discount—around USD 5.14 per barrel less than Brent crude—making it economically advantageous for Indian refineries to process and export it. According to the Centre for Research on Energy and Clean Air (CREA), in the first three quarters of 2024, India exported refined oil products worth billions of euros to the EU, with a substantial portion derived from Russian crude.
India Becomes EU's Top Oil Exporter, Boosted by Discounted Russian Crude and Shadow Tankers
In addition to benefiting from discounted Russian oil, India has become the largest exporter of oil products to the EU, amplifying the unintended consequence of the price cap. Prior to the war, the EU imported around 154,000 barrels per day of diesel and jet fuel from India; this has now almost doubled. CREA’s reports highlight that a significant portion of the EU’s fuel imports from India was derived from Russian crude, further fueling Moscow’s revenue despite sanctions aimed at curbing it. The rise of India's exports underscores the expanding influence of Russian crude in the global oil market, especially given the emergence of a “shadow fleet” of oil tankers. These vessels, not subject to Western sanctions, transport Russian oil without oversight, circumventing the price cap mechanisms. In October 2024, 83 pc of Russia’s seaborne crude oil was transported via these shadow tankers, illustrating the challenges of enforcing the price cap.
Despite international efforts to limit Russian oil revenues, India’s role in facilitating refined fuel exports has intensified, with China being the only larger buyer of Russian crude. In total, India and China account for around 84 pc of Russia's crude exports. As a result, India has emerged as a key player in the global oil market, capitalizing on its refining capabilities and discounted Russian oil to meet Europe’s demand, all while navigating the complexities of international sanctions and the evolving global energy landscape.
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