As Europe's reliance on Russian oil decreases, India has become the continent's largest supplier of refined fuels, according to a recent report by analytics firm Kpler. The ban on Russian oil has led to an increase in demand for alternative sources of diesel, which has resulted in Europe turning to India. However, this boost in demand for Indian crude oil products ultimately means extra freight costs and increased competition for Europe's oil refiners.
Surging Refined Fuel Imports from India
Europe's refined fuel imports from India are set to exceed 360,000 barrels per day, surpassing those of Saudi Arabia. The development has proven to be a double-edged sword for the European Union. While it needs alternative sources of diesel, the boost in demand for Moscow's barrels has wider implications.
Record Amounts of Russian Crude
Despite concerns raised by the West regarding India's imports from Russia during the Ukraine war, Russian crude oil arrivals to India are expected to surpass 2 million barrels per day in April, representing almost 44% of the nation's overall oil imports. India has taken a strong stand and said that it looks at all options to achieve energy security.
Russia Emerges as Major Supplier to India
Russia emerged as a major supplier to India for the first time in 2022-23 (FY23) after it started giving oil at discounted rates amid the Ukraine war. Despite the western price cap of USD 60 per barrel, Russia was the largest exporter of crude oil to India by value in February, followed by Saudi Arabia and Iraq.
Price Cap Designed to Limit Russian Oil Revenues
The western countries' price cap on Russian oil was designed to limit the country's oil revenues while keeping the oil flowing to avoid a global price shock. However, the cap has led to India turning to Russia for its crude oil imports, further solidifying the two countries' economic ties.