Indian Refiners Seize Opportunity Amid Ukraine Attacks on Russian Refineries
Hit by Ukraine’s drone attacks, Russia’s oil refineries are facing significant challenges, leading to a unique opportunity for India. As the price of Russian oil remains substantially lower than that of Middle Eastern alternatives, Indian refiners are seizing the moment to boost their procurement. This strategic move not only enhances their profitability but also positions India as a key player in the global oil market amidst geopolitical tensions.
Russia’s Refining Crisis
In August 2025, Ukraine launched its most extensive drone campaign, targeting critical components of Russia’s oil infrastructure. The attacks struck multiple major refineries, resulting in severe damage and disabling around 20% of Russia’s refining capacity. This disruption equates to a loss of approximately 1.1 million barrels per day (bpd), exacerbating existing fuel shortages within the country. Key facilities, including the Syzran refinery and the Ust-Luga terminal, were significantly impacted, revealing vulnerabilities in Russia’s energy distribution network. In response to the crisis, Russia increased its crude oil exports by 200,000 bpd to international markets. However, this strategy has led to a reduction in domestic fuel supplies, complicating the situation further. The ongoing drone strikes have highlighted the fragility of Russia’s oil industry, which is now grappling with both operational challenges and the need to maintain international market presence.
India Capitalises on Crisis
Amidst Russia’s turmoil, India, the world’s third-largest oil importer, has identified a lucrative opportunity. Major Indian refiners, including Reliance and Indian Oil Corporation, have ramped up their purchases of discounted Russian oil. According to analysts, Reliance could potentially gain an additional $500 million in annual earnings before interest, taxes, depreciation, and amortization (Ebitda) from this strategy. The company’s recent performance has shown a significant increase in refining margins, with transportation fuel cracks rising by 7% to 17%. Despite planned maintenance, Reliance has managed to maintain high throughput levels, leveraging advantageous feedstock to enhance profitability. The company’s leadership noted a 7% growth in petrol demand in India and an increase in global diesel cracks due to geopolitical factors. Reliance has also expanded its distribution network, exporting to Europe, Africa, and Singapore, further solidifying its market position. The benefits of discounted Russian crude have translated into substantial growth for Reliance’s retail division, with diesel and petrol sales surging by 34% and 39% year-on-year, respectively.
India’s Advantage Over China
While Indian refineries operate at full capacity, Chinese refineries are currently undergoing seasonal maintenance, allowing India to process more Russian oil and boost fuel exports. In August, India’s diesel exports to Europe surged by 137%, reaching 242,000 bpd, coinciding with European efforts to reduce reliance on Russian products. Energy analyst Sumit Ritolia emphasized that exports are likely to remain strong as European buyers may increase their purchases of gasoil ahead of impending sanctions in January 2026. This positions India as a crucial supplier of middle distillates to Europe, highlighting its strategic advantage in the global oil market.
US Pressure & India’s Strategic Autonomy
In response to India’s ongoing purchases of discounted Russian oil, the United States has imposed a 25% tariff on Indian goods, citing concerns over supporting Russia’s military actions. Despite this pressure, India remains steadfast in its energy strategy. Finance Minister Nirmala Sitharaman reaffirmed that India will continue to make independent decisions regarding its energy supplies, prioritizing affordability and reliability for its citizens. Strengthening diplomatic ties with Russia, Prime Minister Modi’s recent meeting with President Putin underscored their “special and privileged” partnership, with plans for further discussions in December. However, analysts caution that the current advantages India enjoys from discounted Russian crude may be temporary, as fluctuations in the Urals crude discount could significantly impact India’s import expenses in the future.
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