India continues to expand its oil trade with Russia, marking a significant shift in its energy imports. In the third year of Russia’s invasion of Ukraine, India imported crude oil worth 49 billion euros, according to a global think tank.
Traditionally reliant on Middle Eastern oil, India turned to Russian crude following the onset of the conflict in 2022, taking advantage of the steep discounts offered by Moscow amid western sanctions.
This shift has led to a remarkable transformation in India's oil sourcing. Before the conflict, Russian oil accounted for less than one per cent of India’s total crude imports.
Today, it makes up nearly 40 per cent. The trend has not only strengthened Russia’s foothold in new markets but also played a crucial role in shaping global energy trade dynamics.
According to the Centre for Research on Energy and Clean Air (CREA), India is now one of the top three buyers of Russian fossil fuels, alongside China and Turkey.
Together, these nations accounted for 74 per cent of Russia’s total revenue from fossil fuel sales in the third year of the invasion. China led the list with imports worth 78 billion euros, followed by India’s 49 billion euros and Turkey’s 34 billion euros.
The report highlights an eight per cent increase in the value of India’s imports from Russia compared to the previous year. Russia’s global fossil fuel earnings reached 242 billion euros during this period, bringing the total since the invasion to 847 billion euros.
A significant portion of the Russian crude imported by India was refined into fuels such as petrol and diesel before being exported to Europe and other G7 nations.
The CREA report states that in the third year of the conflict, G7+ countries imported oil products worth 18 billion euros from six refineries in India and Turkey. An estimated nine billion euros of this fuel originated from Russian crude.
As refineries in India and Turkey increased their consumption of Russian crude, the volume of Russian oil used for products destined for G7+ countries saw a ten per cent rise. This, in turn, contributed to a 25 per cent increase in the value of Russian oil used for these exports.
The European Union remains the largest importer of oil products refined in India and Turkey. Around 13 per cent of the total production from these refineries was exported to EU nations in the third year of the invasion.
The Netherlands topped the list of importers with purchases worth 3.3 billion euros, followed by France at 1.4 billion euros, Romania at 1.2 billion euros, Spain at 1.1 billion euros, and Italy at 949 million euros. Australia emerged as the single biggest buyer, importing refined oil products worth 3.38 billion euros.
A notable portion of the Russian oil trade continues to pass through European waters. During the same period, 23 per cent of the oil transshipped in EU waters was bound for China, 11 per cent for India, 10 per cent for South Korea, and two per cent for Turkey.
CREA’s data indicates that between February and September 2024, 331 shipments carrying Russian crude arrived at India’s Sikka port in Gujarat. The average price of these shipments stood at USD 90.8 per barrel, with nearly 65 per cent of the tankers subject to the G7 price cap.
The report further states that if the price cap had been applied to the cost, insurance, and freight (CIF) price, Russia’s crude export revenues could have been reduced by approximately 34 per cent, amounting to a loss of around 5.8 billion euros in 2024 alone.
The shift in India’s oil imports began in February 2022 when Russia’s invasion of Ukraine triggered a wave of economic sanctions from the US, the EU, and other western nations.
These measures were designed to cripple Russia’s economy by restricting its access to key global markets, particularly in energy exports.
As western countries moved away from Russian oil, Moscow responded by offering its crude at significantly discounted prices to alternative buyers.
India, with its high energy demands and price-sensitive economy, capitalised on this opportunity. At the height of the discount period, Russian oil was sold at prices up to USD 18-20 per barrel lower than the global benchmark.
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