India, the world's third-largest consumer and importer of oil, purchased crude oil worth €49 billion from Russia in the third year of Moscow’s invasion of Ukraine, according to a global think tank. Traditionally reliant on Middle Eastern oil, India began sourcing significant volumes from Russia after the war began in February 2022. Western sanctions and European restrictions on Russian oil led to steep discounts, making it an attractive option for India. As a result, Russian crude went from accounting for less than 1% of India’s total oil imports to nearly 40% in a short span.

A report by the Centre for Research on Energy and Clean Air (CREA) highlighted that Russia’s dominance in new markets has solidified, with China (€78 billion), India (€49 billion), and Turkey (€34 billion) together making up 74% of Russia’s fossil fuel revenues in the third year of the invasion. India’s oil imports from Russia also saw an 8% increase compared to the previous year. Globally, Russia’s fossil fuel revenue reached €242 billion in the past year, totaling €847 billion since the start of the invasion.

Interestingly, some Indian refineries processed Russian crude into petroleum products like petrol and diesel, which were then exported to Europe and G7 countries. In 2024 alone, G7+ nations imported €18 billion worth of oil products from six refineries in India and Turkey that refine Russian crude. Around half of this—€9 billion—was directly refined from Russian oil. As refineries in India and Turkey ramped up their use of Russian crude, the volume of oil refined for G7+ countries increased by 10%, contributing to a 25% rise in the value of Russian crude used for these exports.

The European Union remained the largest buyer of petroleum products from Indian and Turkish refineries, with 13% of total production going to the bloc. The top five EU importers were the Netherlands (€3.3 billion), France (€1.4 billion), Romania (€1.2 billion), Spain (€1.1 billion), and Italy (€949 million). Meanwhile, Australia was the single biggest buyer, importing €3.38 billion worth of refined oil. In the third year of the war, 23% of oil transshipped through EU waters was bound for China, 11% for India, 10% for South Korea, and 2% for Turkey, with the rest going to other markets.

Between February and September 2024, 331 shipments arrived at India's Sikka port in Gujarat, with Russian crude averaging $90.8 per barrel. Despite Western price caps, 65% of the tankers delivering oil to India still operated under these restrictions. CREA estimated that applying the price cap strictly could have reduced Russia’s crude export revenues by 34%, or about $5.8 billion in 2024.

Following Russia’s invasion of Ukraine, the US, EU, and other Western nations imposed a series of sanctions to weaken Russia’s economy, particularly targeting its oil exports. To compensate for lost European buyers, Russia offered oil at steep discounts—sometimes $18-20 per barrel lower than global market rates. India, with its vast energy needs and sensitivity to oil price fluctuations, capitalized on these discounts. However, in recent months, the price advantage has narrowed, with discounts shrinking to under $3 per barrel.

Disclaimer: This image is taken from Business Standard.