India emerges as key petrol supplier to Russia as refinery attacks disrupt fuel supplies
Indian refiners have supplied gasoline (petrol) to Russia, with reported volumes of roughly one million barrels over a two-month period
The supplies have largely originated from the Vadinar refinery in Gujarat, operated by Nayara Energy, which is partly owned by Russia's Rosneft
Repeated strikes on Russian refining infrastructure have sharply cut domestic Russian fuel production, triggering a domestic fuel shortage and rationing in several Russian regions
Since 2022, India has increasingly relied on discounted Russian crude oil to meet its refining needs, a dependence that has now extended to reverse flows of refined products back toward Russia
G7 Price Cap Mechanism on Russian Oil (2022)
In December 2022, the G7 nations — along with Australia and the EU — implemented a price cap mechanism restricting the price at which Russian seaborne crude oil could be sold using Western (G7/EU-linked) shipping, insurance, and financial services. The mechanism aimed to curb Russian oil revenues while keeping global oil supply stable, avoiding the price spikes a full embargo could cause.
Key Details
- Original cap set at USD 60 per barrel for Russian crude (December 2022); subsequently lowered by the EU and UK
- Enforcement relies on Western shipping and insurance providers refusing service to cargoes sold above the cap
- Russian crude has since traded partly outside Western services (the "shadow fleet"), reducing the cap's effectiveness
- Russian crude now accounts for a large share of India's total crude oil imports, up sharply from negligible levels before 2022
India's continued, discounted purchase of Russian crude under this price-cap regime is the upstream reason Indian refiners have spare capacity and cost advantage to now export refined petrol back into a supply-constrained Russian market.
EU Sanctions on Refined Products from Russian Crude
The European Union has extended sanctions beyond Russian crude itself to refined petroleum products made from Russian-origin crude in third countries, directly targeting refineries with Russian ownership links, such as Nayara Energy's Vadinar plant.
Key Details
- Rosneft holds a significant minority stake (reported around 49%) in Nayara Energy, which operates a roughly 20-million-tonne-per-year refinery at Vadinar, Gujarat (formerly Essar Oil)
- EU sanctions bar Nayara-refined fuel (e.g., petrol, diesel) from being exported into the European Union
- This has redirected some Indian refined-product exports toward non-EU markets, including, per recent reporting, Russia itself
- The measures form part of the EU's broader sanctions packages against Russia's energy sector following its invasion of Ukraine (2022)
Sanctioned from the EU market, Nayara's Vadinar refinery has found an alternative outlet in Russia's own fuel-short domestic market — illustrating how sanctions regimes can produce unintended trade redirection.
India's Refining Hub Status and Energy Security Doctrine
India has built one of the world's largest refining capacities, enabling it to import crude (including discounted Russian crude) and export refined products, positioning itself as a global "refining hub." This sits within India's broader energy security approach of diversified sourcing and downstream value addition.
Key Details
- India's crude oil import dependence stands at over 85%, making price and source diversification a strategic priority
- Since 2022, Russia has gone from a marginal crude supplier to India's largest single source of crude oil imports, overtaking traditional Gulf suppliers (Iraq, Saudi Arabia) at various points
- India's position has drawn scrutiny from Western partners (US/EU) even as officials have stated India has not been formally asked to halt Russian oil purchases
- Refined product exports (petrol, diesel, jet fuel) are a significant part of India's trade balance, distinct from crude imports
The current episode — Indian refined petrol flowing to a fuel-starved Russia — is a direct downstream consequence of India's post-2022 pivot to discounted Russian crude combined with India's large surplus refining capacity.
- G7/EU/Australia price cap on Russian crude: USD 60/barrel, imposed December 2022; subsequently revised downward by the EU/UK
- Nayara Energy's Vadinar refinery (Gujarat): approx. 20 million tonnes/year capacity; Rosneft holds a significant minority stake
- Reported Indian gasoline supply to Russia: approx. 1 million barrels over a recent two-month window
- Russian refinery throughput reportedly fell to a multi-year (about two-decade) low amid repeated strikes, with a substantial share of capacity offline
- Russian crude's share of India's total crude oil imports has risen from near-zero before 2022 to a leading share among all suppliers since