India has taken advantage of Ukraine’s increased drone assaults on Russian oil refineries, which have drastically decreased Russia’s processing capacity and resulted in supply shortages worldwide.
India has significantly increased its intake of crude after Russia was compelled to dump it at even deeper discounts. This has allowed its refiners to save money and ensure healthy refining margins during a period when diesel supplies are limited globally.
As Indian plants operate close to capacity, bridging the supply gap caused by Russian outages and concurrent Chinese refinery maintenance, refinery margins have increased. With Europe becoming as a top client due to its pressing need for refined non-Russian fuels ahead of tougher 2026 sanctions, this has resulted in a 137% increase in Indian diesel exports.
By establishing itself as a swing provider, New Delhi balances Western criticism with the realities of trade flows while simultaneously gaining increased profits and geopolitical clout in the energy markets.
But there are structural issues ahead: supply chain bottlenecks could be caused by logistical choke points, U.S. taxes on petroleum exports could jeopardize margins, and a prolonged conflict could rebalance price volatility. Notwithstanding these challenges, India’s opportunistic energy policy demonstrates how strategic acquisitions and refinery capacity give it disproportionate power in a world oil system that has been upended.
Due to ongoing drone strikes that are claimed to have caused a 20% reduction in Russian refining capacity, Russia is forced to export crude oil at a significantly higher discount than international benchmarks like Brent. This results in significant savings and increased refining margins for Indian enterprises by providing crude to refiners at a lower price of $5 to $6 per barrel.
Indian refiners benefit from wider crack spreads (price differential between crude and refined fuels) due to cheaper feedstock and limited global diesel supplies brought on by a decrease in Russian refinery outputs. For instance, Reliance’s potential gain from this method is estimated at $500 million yearly before taxes. Refining margins have grown by roughly $1.0-$1.2 per barrel, increasing overall earnings.
Europe is importing more from India as Russian refined product flows decline as a result of sanctions and refinery closures. Ahead of 2026 sanctions on Russian petroleum, India has become a vital swing provider to meet Europe’s energy needs, as evidenced by the recent 137% increase in diesel exports to Europe.
Indian refineries are running at full capacity, allowing India to process more Russian crude and increase its export quantities, so solidifying its position in the global fuel market, whereas Chinese refineries must deal with seasonal maintenance and decreased throughput.
India’s geopolitical power is increased by its capacity to procure inexpensive Russian crude while retaining strong refining and exporting capabilities. It makes independent energy decisions centered on price and dependability, fending off outside pressures like U.S. tariffs and sanctions. This promotes economic growth while fostering diplomatic ties with Russia.
The benefits that India receives each year from buying Russian oil at a discount might total about $2.5 billion, which would significantly increase the country’s GDP and energy sector growth while also helping to finance the expansion of its industrial and energy infrastructure.
Benefits are contingent on Russia’s refining capacity remaining constrained; Russian repairs or strategic adjustments may lessen the discount advantage.
Export profitability is at risk due to U.S. levies on Indian goods connected to imports of Russian petroleum.
As export quantities rise, supply chain and logistics constraints may appear.
India will continue to benefit from competitive crude pricing, increased refining profitability, stronger export volumes, particularly to Europe, and strengthened geopolitical energy leverage if Ukraine’s drone strikes on Russian refineries continue. This will solidify India’s position as a major player in the upended global oil market.
