India saved $3.6 billion by importing crude oil from Russia. The country was able to resist the Western pressures where sanctions are placed on any country doing trade with Russia. On the contrary, India has strengthened its trade ties with Russia in these years. Resultantly, it is buying cheaper oil from Russia on much lower rates from other OPEC members.

Moreover, its simple business model is bringing results. It is buying crude oil from Russia at discounted rates. It refines the Russian oil and sells it to Europe. As the Ukraine War continues, the Europeans are unable to directly get oil from Russia. Here, India offers the solution and like a budding entrepreneur, it has seized this opportunity to earn a few extra billion dollars for its economy. Today, India is one of the key suppliers of oil to Europe by simply turning a threat into an opportunity.

India is the world’s third-largest crude consumer after the United States and China, and imports 85 percent of its needs. India used to import most of oil from the Middle East. However, Russia has become its major supplier for the past two years. And it is double interest. For India, it is cheaper oil. For Russia, it has a large global market through India when it is completed isolated.

Interestingly, India imported 1.62 million barrels every day in March 2023 alone which makes 40% of its oil imports, claims International Energy Agency. Last week, Russian energy giant Rosneft announced a deal to “substantially increase” supplies to the state-owned Indian Oil Company.

Fuel Prices in India

We calculate that India has saved around $3.6 billion as it bought Russian Oil on discounted rates in the last 10 months, claimed a parliamentary member in Indian Parliament. Interestingly, India is purchasing Russia’s flagship Urals crude well below the $60 per barrel price cap introduced by the G7 in December. The Indian economy is reaping the benefits as it is buying the oil at much cheaper price from the international market.

India has been seeking lower oil rates for its consumers to ensure it can supply fuel to its citizens at the lowest possible price. India is buying the crude oil at lower price and selling it at relatively lower rates. Still, it is able to maintain balance with minor inbuilt taxes in fuel prices.

Indian Foreign Minister S. Jaishankar had stated, “As the world’s third-largest consumer of oil and gas, a consumer where the levels of income are not very high, it is our fundamental obligation to ensure that the Indian consumer has the best possible access on the most advantageous terms to international markets.” He was addressing the journalists in Moscow in November 2022.

Why didn’t the West Sanction India?

India’s import of 1.62 million barrels every day is a huge count. There are 23 oil refineries in the country. These refineries process 249 million tonnes of oil every year. It makes India the world’s fourth-biggest refiner. India also has the world’s largest refinery in Gujarat. This refinery is owned by the richest person in Asia, Mukesh Ambani. Ambani’s Reliance Industries also took part in buying Russian Oil.

The cargo tracking firm, Vortexa, shares that Reliance and Nayara (India’s second-largest refiner) imports 45 % Russian crude oil that comes into India. Thus, it is significant number. Yet, Reliance is also doing business with US and European markets.

There aren’t any sanctions on India or any of the Indian companies despite Indian trade with Russia. And there aren’t any sanctions. The apparent reason is India’s mammoth economic, cultural and strategic strengths. No country in the world would like to alienate such a large number of people and a commercially viable empire.

Can India resell the Russian Oil?

India exported 11.6 tonnes of petroleum products to the European Union in a nine month period from April 2022 until January 2023. This becomes a 20.4 % increase year on year in terms of export of petroleum products to the European Union.

Interestingly, India refines 249 million tonnes of oil every year out of 1.62 million barrels every day that India imports. Most of this refined fuel is for Indians. However, a lot of oil is left even after utilization by the Indian consumers. Thus, India has surplus reserves of fuel. And, it supplies petrol and diesel to different countries of the world.

So, how does India resells the Russian Oil to Europe?

Actually, the sanctions are on Moscow. And, the refined products are not deemed to have come from Russia. The fuel is an Indian product once it is refined.

But a better reason could be the European Union’s own needs. The people in European Union are already facing increasing inflation in their markets. Any other crisis such as fuel shortage or a significant increase of prices can severely affect the Europeans.

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How successful is India’s Russian Fuel Policy?

Had there been direct trade ties between Russian and European Union, it would never be possible. However, India has been quite successful in achieving the great economic interest out of the situation by all means. While the Europeans and Russians were fighting amid the Ukraine war, India was able to get the Russian Oil at cheaper rates, refine it and sell it to Europeans. This way it is also become a fuel products exporter in the global market.