In a remarkable turn of events, India has established itself as Europe’s primary supplier of refined fuel, surpassing even oil giant Saudi Arabia. A recent report by analytics firm Kpler reveals that Europe’s reliance on Indian crude oil products has skyrocketed, primarily due to Western sanctions imposed on Russian oil. As the European Union seeks alternative sources of diesel following the cessation of direct flows from Russia, India has stepped in to meet the demand, emerging as a leading exporter in the process.
Europe’s imports of refined fuel from India are projected to surpass an impressive 360,000 barrels per day. This development comes as a relief to the European Union, which has been forced to seek alternative options after severing ties with its previous top supplier, Russia. However, this shift in dependency comes with its own set of challenges. With the rise in demand for Moscow’s barrels, Europe now faces additional freight costs, presenting a double-edged sword for the region.
The surge in India’s exports of finished jet fuel and diesel products to Europe can be attributed to record imports of cheap Russian crude oil during the Financial Year 2022-23. Shipping data analyzed by Kpler and Vortexa indicate that European imports from Indian refiners stood at 154,000 barrels per day before the Russia-Ukraine conflict. However, after the European Union imposed a ban on Russian oil on February 5, these imports surged to 200,000 barrels per day, further solidifying India’s position as a key player in the energy market.
European refiners, unable to access inexpensive Russian crude, now face fierce competition from their Indian counterparts as the latter strengthen their foothold in the energy-hungry market. Kpler estimates that India’s imports of Russian oil are anticipated to exceed a staggering 2 million barrels per day in April, accounting for 44% of India’s overall oil imports.
India’s emergence as a major market for Moscow in FY23 can be attributed to the steep price discounts offered by Russia on crude oil. These discounts were prompted by Western sanctions and the ban on oil shipments to Europe. Despite facing criticism from Western nations, India has prioritized meeting its energy demands through Russian oil. Failure to do so would have resulted in a serious economic crisis for India, given the imported inflation caused by rising oil prices.
Based on its value, Russia has now become India’s leading exporter of crude oil, with imports from the country valued at USD 3.35 billion. Saudi Arabia follows closely behind at USD 2.30 billion, with Iraq ranking third at USD 2.03 billion. The Western-imposed price cap of USD 60 per barrel was intended to restrict Russian oil revenues while ensuring the uninterrupted flow of oil, thereby preventing a global price upheaval.
India’s ascendancy as a top oil exporter is a testament to its resilience and ability to adapt to changing market dynamics. By stepping up to fill the European Union’s fuel gap, India has positioned itself as a reliable and crucial player in the global oil trade. With its strategic partnerships and growing influence, India is poised to continue shaping the energy landscape in the years to come.