In the first nine months of this year, India’s oil exports to the European Union (EU) shot up by 58%. This spike has raised eyebrows, as much of this oil is processed from Russian crude — the very oil the EU banned following the Ukraine conflict. This intriguing shift is part of a complex dance of energy politics, where India, a top global oil consumer, has found itself profiting from a loophole in the sanctions.
According to the Centre for Research on Energy and Clean Air (CREA), a think tank, India’s refineries are increasingly dependent on Russian oil. Russia has even become India’s second-largest supplier of fossil fuels. In October alone, nearly 77% of what India imported from Russia — worth a whopping $2 billion — was crude oil.
The roots of this situation go back to early 2022, when the EU and G7 nations set up sanctions against Russian oil. They introduced a price cap on Russian crude and prohibited direct imports of oil products refined in Russia, aiming to hit Russia’s economy hard. But there was a catch: these restrictions only applied to oil directly shipped from Russia. If Russian crude oil is shipped to other countries, like India, refined, and then exported to Europe, it slips through the cracks of the sanctions.
India has been quick to capitalize on this opportunity. By buying Russian crude at heavily discounted prices, refining it, and selling the finished products to Europe, India has created a lucrative niche. Indian officials argue that this strategy isn’t about politics but about ensuring affordable energy for India’s massive population. For India, the priority is a stable and affordable energy supply, especially as it’s now the world’s most populous nation and the third-largest oil consumer.
India’s trade relationship with Russia has surged. In 2023 alone, trade between the two nations has reached $65 billion — an impressive 80% increase from the previous year. Russian oil now makes up 40% of India’s crude imports, a stark jump from just under 1% before the Ukraine crisis.
Despite this economic boon, India’s continued trade with Russia hasn’t gone unnoticed by Western allies or Ukraine. Ukrainian President Volodymyr Zelensky recently urged India to reconsider what he called a “neutral position” on the conflict, suggesting that New Delhi should join Western countries in isolating Moscow economically.
Meanwhile, India seems to be doubling down on its energy partnership with Russia. Indian Foreign Minister Subrahmanyam Jaishankar, speaking at a recent Russian-Indian business summit, reiterated that India is committed to a long-term energy relationship with Russia to withstand global uncertainties together.
By refining Russian oil and exporting it to the EU, India has cleverly navigated around international sanctions, prioritizing its economic and energy needs. This move not only boosts India’s economy but also places it in a unique position in the global energy landscape, as an essential link between the East and the West.
