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Quitting Russian Crude May Disrupt Indian Refinery Ops: Oil Analyst
Quitting Russian Crude May Disrupt Indian Refinery Ops: Oil Analyst
Sputnik India
Indian Petroleum Minister Hardeep Singh Puri warned recently that global crude prices could have hit $130-140 a barrel if Russian oil isn't available to the global market.
2025-08-04T18:44+0530
2025-08-04T18:44+0530
2025-08-04T19:55+0530
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Any decision on India's part to significantly diverse its crude sources away from Russia to the US or Middle-Eastern countries could have an impact on the Indian retail consumer, particularly those buying diesel, an energy market specialist has told Sputnik India.Diesel, a byproduct derived from refining petroleum, plays a significant role in powering India's transport sector (mainly heavy duty vehicles) and has applications in the agriculture sector, which employs around half of India's workforce.While the European Union (EU) stopped importing Russian crude directly in the wake of the Ukraine conflict, European importers have been lapping nearly 200,000 barrels per day (bpd) of refined products (diesel, gasoline, etc) from Indian refiners since last year, according to reports. The US threat of imposing an unspecified "penalty" on India for purchasing Russian crude has caused some concerns in India, mainly due to exposure to US Dollar (USD)-dominated capital markets.Arpit highlighted that lower global crude prices, on account of India's decision to ramp up supplies of Russian crude since 2022, have already benefited India, which accounts for 2% of the global crude demand.According to an estimates reported in media, Indian refiners and the government saved around $25 billion in import bills between 2022 and this year due to the decision to import Russian oil, which accounted for only 0.2% of India's overall imports in 2022.On the other hand, Russia produces around 9 billion barrels of oil per day, which amounts to 10% of daily global production and consumption.
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Quitting Russian Crude May Disrupt Indian Refinery Ops: Oil Analyst
18:44 04.08.2025 (Updated: 19:55 04.08.2025) Indian Petroleum Minister Hardeep Singh Puri warned recently that global crude prices could have hit $130-140 a barrel if Russian oil isn't available to the global market.
Any decision on India's part to significantly diverse its crude sources away from Russia to the US or Middle-Eastern countries could have an impact on the Indian retail consumer, particularly those buying diesel, an energy market specialist has told Sputnik India.
"While India has the option to diversify its crude sources by turning to suppliers like the United States and the Middle-East, such a shift could disrupt refinery operations and potentially lead to higher diesel prices. This is particularly significant as India exports a substantial volume of diesel to Europe," said Arpit Chandna, an Energy Market Specialist at the London Stock Exchange Group (LSEG).
Diesel, a byproduct derived from refining petroleum, plays a significant role in powering India's transport sector (mainly heavy duty vehicles) and has applications in the agriculture sector, which employs around half of India's workforce.
Arpit said that a fluctuation in global diesel prices due to EU sanctions could have a spill-over effect on Indian retail consumers, unless the government asks the refiners to absorb the increased costs.
While the European Union (EU) stopped importing Russian crude directly in the wake of the Ukraine conflict, European importers have been lapping nearly 200,000 barrels per day (bpd) of refined products (diesel, gasoline, etc) from Indian refiners since last year, according to reports.
The US threat of imposing an unspecified "penalty" on India for purchasing Russian crude has caused some concerns in India, mainly due to exposure to US Dollar (USD)-dominated capital markets.
"While discounts on Russian crude may be negligible when global prices are low, they become highly attractive during periods of high oil prices. India has demonstrated resilience in securing its energy needs by capitalizing on these discounted, price-capped Russian supplies," the energy specialist explained.
Arpit highlighted that lower global crude prices, on account of India's decision to ramp up supplies of Russian crude since 2022, have already benefited India, which accounts for 2% of the global crude demand.
"Indian refineries are well-adapted to processing heavy-grade Russian Urals, which make up about 70% of the Russian crude they import. Refinery throughput has increased in recent quarters, with record-high diesel exports in May — 906.03 Kt to Europe and 760.73 Kt to the Greater Singapore area. In June, India exported approximately 946 Kt of diesel to Africa, with July volumes again rising for both Europe and Africa," Arpit said, explaining the benefits accrued to Indian refiners by procuring cheaper oil and re-selling the refined products to other geographies.
According to an estimates reported in media, Indian refiners and the government
saved around $25 billion in import bills between 2022 and this year due to the decision to import Russian oil, which accounted for only 0.2% of India's overall imports in 2022.
"As a major crude importer and refined product exporter, India is now playing a significant role in influencing global energy prices. By purchasing discounted crude, India helps moderate global oil prices, while its diesel exports to multiple regions contribute to price regulation in refined product markets," Arpit said.
On the other hand, Russia produces around 9 billion barrels of oil per day, which amounts to 10% of daily global production and consumption.
