Key Points:
- Russia has become India’s largest oil supplier, providing 35-40% of total imports up from just 0.2% before the 2022 Ukraine war.
- Indian refiners, including Reliance and Nayara, leveraged steep discounts on Russian crude to achieve record profit margins and export dominance.
- The combined net profits of Indian state oil marketing companies surged from ₹3,400 crore in FY23 to nearly ₹87,000 crore in FY24 as a result of cheap Russian oil.
- Exports of refined products to the EU touched $19.2 billion in FY24, making India the EU’s top fuel supplier but dropped to $15 billion in FY25 due to new sanctions restricting Russian-origin crude products.
- US President Trump’s administration imposed a 25% tariff on Indian goods, threatened further penalties over Russian oil, and the EU introduced new price caps and direct sanctions on Indian refiners such as Nayara.
- Analysts warn that a forced switch away from Russian oil could spike India’s import bill by $9-11 billion a year, potentially fueling inflation.
In just three years, Russia’s share of Indian crude imports skyrocketed from 0.2% to nearly 40%, making it India’s top energy partner. This shift was triggered when Western sanctions, after the Ukraine invasion, created hefty discounts on Russian oil sometimes up to $40/barrel below Brent benchmarks.
Current Import Scale
- India imported 1.75–1.8 million barrels of Russian oil per day in 2025, valued at approximately $50.3 billion, about a third of its $143.1 billion annual crude bill.
Key Players & Profit Windfalls
Private Refiners:
- Reliance Industries:
With the largest refinery in Jamnagar, Reliance imported discounted Russian crude to boost refining margins reportedly exceeding $12.5 per barrel. The company cleverly split operations to remain EU-compliant for exports while maximizing profits from lower-cost Russian feedstock. - Nayara Energy:
Nearly half owned by Russia’s Rosneft, Nayara relied on Russian oil for 70% of its feedstock, achieved margins above $15/barrel, but has faced operational hiccups after being directly sanctioned by the EU in July 2025, including ships withdrawing from contracts under pressure.
State-Owned Giants:
| Company | FY23 Net Profit | FY24 Net Profit | YoY Growth (%) |
|---|---|---|---|
| IOC | ₹8,242 crore | ₹39,619 crore | 381% |
| BPCL | ₹1,870 crore | ₹26,674 crore | 1,326% |
| HPCL | -₹8,974 crore | ₹14,694 crore | Reversal |
Combined, profits soared from ₹3,400 crore in FY23 to nearly ₹87,000 crore in FY24, mainly due to the Russian crude bonanza.
The “Import-Refine-Export” Goldmine
Indian oil companies didn’t just consume the discounted crude but refined it into diesel, petrol, and jet fuel—much of which was exported, including to the EU. In FY24, India’s exports to the EU amounted to $19.2 billion, outpacing traditional suppliers like Saudi Arabia. However, fresh EU rules to block “laundered” Russian oil have already slashed these exports by 27% to $15 billion in FY25.
Financial Mechanics: Profits Squeezed
Initially, Russian crude traded at discounts of $5-40 per barrel versus global benchmarks. By mid-2025, sanctions and price caps have narrowed this gap to $2.5–4 per barrel, making the arbitrage less lucrative.
Policy Backlash & Strategic Shifts
US and EU Actions:
- Trump’s administration introduced 25% tariffs on Indian goods, threatened more tariffs and even 100% tariffs over ongoing Russian oil purchases.
- The EU lowered its oil price cap from $60/barrel to $47.6/barrel and banned imports of products made from Russian crude outside Russia. Nayara was explicitly blacklisted.
- Exporters now face contract withdrawals and legal hurdles, especially for Russian-linked products shipped to Europe.
Indian Response:
- State-run refiners sharply cut Russian purchases in July 2025, pivoting to more Middle Eastern and US supplies.
- Private refiners, especially Reliance and Nayara, continue to import Russian crude but are diversifying and targeting more non-EU markets.
Economic Stakes
Economists predict that a total pivot away from discounted Russian crude could push India’s annual import bill up by $9–11 billion a hike likely to trigger domestic fuel inflation. The Russian oil policy, for now, delivers inflation control, foreign currency savings, and global export supremacy even as geopolitical headwinds gather.
India’s oil giants struck a windfall by exploiting Russian crude discounts and global supply shifts. With intensifying Western sanctions and tariffs, the golden run faces mounting risks forcing the world’s third-largest crude importer to walk a tightrope between profit and geopolitics.
