How Russian oil sanctions turned India into an oil refining giant

Summary

India, while not a major oil producer, has become a leading refiner and exporter of oil products, particularly to Europe. As sanctions on Russian oil disrupted global markets, India capitalized on these gaps, refining cheap crude and supplying Europe with refined fuels. India's refineries, fueled by cheap Russian oil, have grown exponentially, with exports to Europe skyrocketing. This shift has made India Europe's largest fuel supplier, displacing Saudi Arabia. With ambitious expansion plans, India aims to increase its refining capacity by 50%, positioning itself as a dominant force in global oil trade.

Takeaways

• 😀 India is ranked 24th in oil reserves and 20th in oil production globally, but it is the third-largest consumer of oil after the United States and China.
• 😀 India is the fastest-growing oil refiner and exporter in the world, especially in refining products for export to Europe.
• 😀 The sanctions on Russian oil created new opportunities for Indian oil refiners, significantly boosting exports to Europe.
• 😀 Indian refineries capitalized on COVID-19 refinery shutdowns in Europe by staying open and taking market share.
• 😀 India bought cheap crude oil when global air travel was at zero, benefiting from the briefly negative crude prices.
• 😀 European sanctions on Russia allowed India to step in, buying Russian oil, refining it, and becoming Europe's largest supplier of refined fuels.
• 😀 India's fuel exports to Europe doubled to 17 million tons, valued at over $16 billion, in a single year after sanctions were imposed on Russia.
• 😀 In the 9 months ending January 2024, India exported $8.4 billion worth of gasoline and diesel fuel to Europe, marking a 58% increase year-over-year.
• 😀 India sources its oil primarily from Russia and Iraq, with a growing volume of Russian oil after discounts have mostly disappeared.
• 😀 India's energy strategy is focused on aggressive refinery expansion, aiming for a 50% growth in its refinery capacity to meet both domestic and export demands.

Q & A

Why is India not considered a major oil producer?

India is ranked 24th in the world for oil reserves and 20th in oil production, which is why it's not considered a major oil producer.

What makes India the world's third-largest consumer of oil?

India's oil consumption ranks third globally, behind the United States and China, due to its large population and growing economy.

How did India's oil refining industry grow rapidly?

India's oil refining industry grew rapidly due to European sanctions on Russian oil, creating new markets for India to export refined fuels.

What role did COVID-19 play in India's oil refining boom?

During the COVID-19 pandemic, many European refineries shut down, while India's refineries remained open, allowing India to capture a significant share of the market.

How did sanctions on Russian oil benefit India's oil refining sector?

The sanctions on Russian oil opened up a new market for Indian refiners to purchase discounted Russian crude, refine it, and export the products, particularly to Europe.

What impact did the European sanctions on Russian oil have on India's exports?

India's exports of refined fuels to Europe surged after the sanctions, with a notable increase in the export of gasoline and diesel to countries like the Netherlands and the United States.

How did India's oil exports to Europe change between 2022 and 2024?

India's oil exports to Europe grew by 58% year-over-year, going from less than 1% to 40% of Europe's total refined oil imports from 2022 to 2024.

What is India's relationship with Russian oil in the global market?

India is now the largest buyer of Russian crude oil, which it refines and exports, making it Europe's top supplier of refined fuels, surpassing Saudi Arabia.

What are India's energy import needs and plans for expansion?

India imports a significant portion of its energy, with domestic production covering only 12% of its demand. It plans to expand its refining capacity by up to 50% in the coming years.

What is the projected trend in India's oil consumption through 2050?

India is expected to be the only major economy with sharply rising oil consumption, as shown by the pink line in projections for 2050, indicating a substantial increase in energy demand.