India’s Misunderstood Role in Global Oil Markets: Sanctions Changed Oil Trade Directions But Did Not Change Supply & Demand

Sanctions redirected oil trade, with India at the crossroads. Redirecting trade again is possible, but cutting supplies must not be an option. (With 5 Charts)

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Note: 2025 data in this note cover only the first 7 months.

G7/EU sanctions on Russian crude and products redirected global oil trade but did not affect supply and demand, not even in India. The EU's 18th sanction round and President Trump's penalties on India for importing Russian crude may disrupt oil market supply, harming global economic growth and derailing President Trump’s efforts to lower interest rates and inflation.

This Note clarifies misconceptions about India’s role in the global oil market. Contrary to belief, India’s oil imports haven’t surged significantly in the past three years, nor does it import large amounts of discounted Russian oil, refine it, and export to Europe and the US at global prices. Oil imports are handled by both private and government-owned refineries, not just private ones. Imports grew within forecasts, sometimes lower, and exports of petroleum products haven’t risen significantly. Trade direction shifted due to G7/EU sanctions on Russian oil, benefiting major Indian oil companies. Most discounts on Russian crude stem from high shipping costs, not direct savings for refineries.

Figure (1) shows India’s crude oil imports since 2017. Data for 2025 are only for the first seven months. Historically, most came from Iraq, Saudi Arabia, Gulf states, and some African countries. After US crude exports began under President Obama, India imported from the US. Post the 2022 Russian invasion of Ukraine and G7/EU sanctions, oil imports from Russia surged, meeting India’s growing demand and replacing oil from high-shipping-cost regions like the US, South America, and West Africa. Imports from Iraq, Saudi Arabia, and the UAE remained stable in volume but dropped as a share of India’s rising demand.

From 2021 to 2025, India’s crude imports grew by 763 kb/d, while Russian imports rose by 1.695 mb/d. The 932 kb/d difference replaced imports from other sources: the US lost 119 kb/d, African countries (mainly North and West) lost 270 kb/d, and South American countries lost 247 kb/d. Imports from Iraq, Saudi Arabia, and the UAE stayed flat, while Kuwait and Oman’s imports fell due to their new refineries reducing crude exports. India replaced these with Russian oil.

Key takeaways from Figure (1) are that India swapped high-shipping-cost crude from the US, South America, and Africa with cheaper Russian crude. About 932 kb/d of costlier oil or oil redirected to Kuwait and Oman’s refineries was replaced by Russian imports. Sanctions on Russian crude shaped trade directions and India’s purchasing patterns.

India’s Exports of Petroleum Products

A myth circulates that India imports large amounts of Russian crude to refine and export as petroleum products. However, current petroleum product exports are nearly identical to 2019 levels, three years before Russia’s invasion of Ukraine, as shown in Figure (2). With or without Russian oil, India’s petroleum product exports will remain steady.

Figure (2) shows that while total petroleum product exports have not changed significantly, exports to Europe increased to fill the gap created by EU sanctions on Russian petroleum products in February 2023. Exports to Asia declined, but those to Europe and Africa rose. As European economic growth slowed and some countries grew cautious about importing products from Russian oil, Indian refineries found new markets in Africa and elsewhere. If the EU bans all petroleum products from Russian oil, products will shift in the Mediterranean and Western Europe, with Indian products finding markets in the Middle East and Africa. We believe that Indian refineries can prove their exports to Europe are not made from Russian oil by using crude they are already importing form other countries.

Notably, when the G7/EU imposed sanctions on Russian crude in late 2022, they allowed imports of significantly modified Russian oil, such as refined products. Indian refiners’ exports to the EU and US align with the sanctions’ intent. New refineries in Kuwait, the UAE, and Oman have supplied Asian markets no longer receiving Indian petroleum products (See the decline in exports to Asian countries in Figure (2).

Another myth is that India’s private companies primarily import Russian crude. This is incorrect; most refiners, both private and government-owned, have been importing Russian crude since the Ukraine invasion, as shown in Figure (3).

However, private companies import about 60% of India’s crude oil imports from Russia, with government-owned companies importing the remaining 40%. Reliance Industries (RIL), a private company, accounts for about one-third of these imports, as shown in Figure (4). The Indian Oil Corporation (IOC), government-owned, imports 16%. Nayara, a private company, imports 15%, followed by Bharat Petroleum Corporation (BPCL), government owned, with 12%. HMEL, a private company, imports 10%. Oil and Natural Gas Corporation (ONGC), government-owned, imports 8%, and its subsidiary, Hindustan Petroleum Corporation Limited (HPCL), imports 5% of India’s total crude oil from Russia in the first seven months of 2025.

The main takeaway from Figure (4) is that almost all Indian refiners are involved in importing crude from Russia.

Who is selling Petroleum products to Europe?

Reliance Industries dominates with an 88% market share, followed by ONGC at 7.8% and Nayara at 2.5%. Others account for the remaining 1.7% and are occasional exporters.

EU sanctions on Nayara, co-owned with Russia's Rosneft, were hyped by the media as causing skyrocketing diesel prices. However, Figure (5) shows exports to Europe are minimal, so the impact will be limited, and Reliance can easily compensate. Sanctioning Nayara while sparing Reliance suggests the EU prioritizes its interests while appearing to support Ukraine. Key lesson: No politician in Europe or the US wants higher oil or fuel prices.

Conclusions

India's oil demand growth was predicted and unrelated to Russian oil imports or discounted prices. Consequently, given the correlation between demand and crude imports, quantity of oil imports was also predictable.

G7/EU sanctions on Russian crude and petroleum products altered global trade but not India's total demand or supply. Fears of high oil prices concerned European and US politicians, who allowed and sometimes promoted Russian oil exports to Asia. Indian companies, both private and government-owned, capitalized on import and export opportunities, as shown in Figures (1) and (2). Worth noting, as shown in Figures above, that when the US sanctioned Iranian and Venezuelan oil and prevented other countries form dealing with them, Indian refineries stopped importing form both countries. No similar restrictions on Russian crude has been made yet.

Global trade changes, sanctions, price caps, and payments require flexibility and speed, favoring private companies over government-owned ones. Private firms are more active in Russian trade and exports to Europe, as government companies face stricter regulations and sanction sensitivities, giving private companies an edge.

The impact of EU sanctions on Nayara refinery have been overstated by media. EU imports from Nayara are minimal, with most exports from Reliance Industries. The EU continues sanctions while minimizing self-harm, explaining why Indian refineries ignore EU tanker sanctions.

Bottom Line: Sanctions redirected oil trade, with India at the crossroads. Redirecting trade again is possible, but cutting supplies to India must not be an option. EOA