India has recently emerged as Europe’s top supplier of refined fuels while also buying record amounts of crude oil from Russia, according to data from analytics firm Kpler. The embargo on Russian oil has increased Europe’s reliance on Indian crude oil products. According to Kpler’s statistics, refined gasoline imports from India are anticipated to rise by over 360,000 barrels per day, passing Saudi Arabia’s.
While this development gives the European Union access to substitute sources of diesel after Russia, which was previously its top supplier, cut off direct flows, it is also a double-edged sword for the region. The increased demand for Moscow’s barrels means extra freight costs and more competition for Europe’s oil refiners, which cannot access cheap Russian crude. Furthermore, the move comes amid wider market scrutiny about the source of the region’s diesel imports.
According to Kpler statistics, Russian crude oil shipments to India are projected to reach 2 million barrels per day in April, accounting for about 44% of the country’s total oil imports. Despite concerns raised by the West about India’s imports from Russia during the conflict, Russia started providing oil at discounted rates during the Ukraine war, and as a result, it became a major supplier to India for the first time in 2022–23 (FY23). India, however, has adopted a firm stance and said to explore all possibilities to attain energy security.
In February, Russia was the largest exporter of crude oil to India by value, with crude imports from Russia at USD 3.35 billion, followed by Saudi Arabia at USD 2.30 billion and Iraq at USD 2.03 billion, according to data from the Union Ministry of Commerce and Industry. The Western price restriction of USD 60 per barrel was established to keep oil flowing while limiting Russian oil earnings to prevent a sudden spike in prices.
The rapid rise in Indian purchases of Russian oil can be attributed to a simple reason: Russian energy companies are offering steep discounts for purchasers. And few developing countries would be inclined to refuse such an offer.
India’s GDP is significant, yet its per capita income is low. As fuel prices rise in other countries, Indian state-owned fuel companies have refrained from increasing prices since April.
Additionally, Indian refineries are refining discounted Russian oil and re-exporting those oil products to the United States and Europe.
India’s purchases of Russian oil may also be driven by ideology. Like China, India is one of Russia’s top allies. While the Biden administration has urged India to cut ties with Moscow, New Delhi has defended the independence of its foreign policy, which it refers to as “strategic autonomy.” Subrahmanyam Jaishaknar, India’s senior diplomat, has defended India against Western criticism of its close relations with Russia in a number of public forums in recent months. While Europe’s purchases of Russian fuel far exceed those of India, India’s recent, rapid emergence as a major buyer of Russian oil is helping fuel Moscow’s war on Ukraine.
India’s partnership with the West will remain limited to countering China in its neighborhood. Despite the clear economic and domestic political reasons why India is buying Russian oil, with its public defiance of Western pressure, India is signaling that its alignment with the West is not unconditional.
