India’s oil trade has undergone a seismic shift

A file photo of an oil tanker owned by Shipping Corp of India.
A file photo of an oil tanker owned by Shipping Corp of India.


  • Russia is now India’s largest supplier of crude oil, ahead of West Asian countries, accounting for 27% of India’s crude imports this February, up from 6% in April 2022

From where it buys crude oil to where it sells finished petroleum products, India has seen massive changes in its oil trade since the Ukraine war began, propelling profits for Indian oil companies. Russia is now India’s largest supplier of crude oil, ahead of West Asian countries, accounting for 27% of India’s crude imports this February, up from 6% in April 2022. Between those two months, Russia accounted for 20% of India’s crude imports, against about 2% a year prior.

India processes this crude oil into various petroleum products (such as petrol, diesel and aviation fuel), which are either sold domestically or exported. Sanctions on Russia mean that Europe, which was historically a major buyer of Russian oil, cannot buy either crude or petroleum products from Moscow. But Russian oil is indirectly making its way to Europe, including via India.

Russia has been offering crude at a discount. This has helped it find buyers elsewhere, including India. A recent Bloomberg report said that crude sold by Russia to India is now finding its way back to Europe in the form of finished petroleum products, possibly making India Europe’s largest supplier of refined fuels in April. At the same time, Europe has become India’s largest export destination for petroleum products, with exports to the Netherlands increasing by 175% this February compared with April 2022. Thus, Russian crude is still driving Europe’s economies, except that the fuel is now being routed through India. Further, the bulk of these exports to Europe are by Indian private sector oil refiners.

Higher Margins

The current ability of Indian refiners to buy crude oil at a discount to global prices has meant a widening gap between the price at which they are importing crude oil (raw material) and the price at which they are exporting petroleum products (finished products). This price differential—essentially, the gross refining margin for refiners—has increased dramatically for four major petroleum products, from $46-$170 per metric tonne in early 2021 to $150-$300 per metric tonne currently.

Gross refining margins of public sector oil companies have soared: from $8.52 per barrel in 2021-22 to $21.08 per barrel for 2022-23 for Indian Oil Corp. Ltd., and from $6.78 to $20.08 for Bharat Petroleum Corp. Ltd.

As a result, their profits surged. The government had imposed a windfall tax on oil companies in India to mop up such a surge in gross profits, though this tax was subsequently withdrawn.

Private Profits

More than public sector oil companies, India’s two private refiners, Reliance Industries and Nayara Energy, are likely to have gained more from the shifts in the oil trade. According to energy cargo tracker Vortexa, “private refiners have led the increase in Russian crude purchases". It says the share of private refiners in India’s crude oil imports from Russia rose from an average of 40% in July-Nov 2022 to 48% in December. Further, 95% of India’s exports of petroleum products to Europe were made by private refiners, say news reports, citing Vortex analysis.

Reliance’s oil-to-chemicals division, which houses its refining business, posted record gross earnings for 2022-23. Its Q4 EBITDA margin was 12.7%, up from 9.8% a year ago. In a presentation to investors, Reliance said the EU ban on Russian petroleum products had been positive for its margins, and that a full recovery in the Chinese economy in the second half of 2023 would boost demand for petroleum products.

Whither Discounts?

In spite of the discounts that Russia has been offering Indian buyers on crude oil, import data shows there have been times when the landed price (includes cost of shipping and insurance) of Russian crude on Indian shores has been higher than the price from other traditional suppliers such as Iraq. Further, Russian oil discounts to India have reduced as China stepped up purchases of Russian crude.

In January and February 2023, Russia replaced Saudi Arabia as the top supplier of crude oil to China. Yet, until the Ukraine war ends and European Union (EU) sanctions on Russian oil remain, it is likely that the EU will remain a lucrative market for Indian refiners. But with other countries, notably China, increasing purchases of Russian crude, more shifts and realignments could be in store. is a database and search engine for public data

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