Cheap Russian Oil, Costly Petrol: India’s High-Stakes Energy Gamble
“Trump accuses India and China of funding war by buying discounted Russian oil.”
On the television, the same words repeat with loud graphics.
A bright map shows Russia in red and arrows pointing towards India and China.
For a moment, I just sit back and think.
This is not only about politics far away.
It is about the petrol in the car that drops children to school,
the diesel in the truck that brings vegetables to the mandi,
and the LPG cylinder that cooks the dal in our kitchens.
What really lies behind this headline?
When we talk of global oil politics, everything begins with where the oil is actually coming from.
The five biggest producers United States, Saudi Arabia, Russia, Canada and China pump out over half of the world’s crude oil and liquids each day.
But how much do they keep for themselves, and how much do they ship across oceans?
The answer shapes prices, trade routes and even the food on our plates.
Knowing who produces the most oil is only the start.
The real insight comes when we look at how each producer uses, stores, and ships its oil, and what that means for the rest of the world.
1. United States –
The U.S. remains the world’s largest oil and liquids producer around 20 million barrels a day in 2024.
But unlike Saudi Arabia or Russia, it consumes almost as much as it produces, thanks to its huge transport and petrochemical sectors.
Its exports are often about specific grades of light crude and refined fuels.
This makes the U.S. a market balancer: when domestic shale output rises or falls, global prices respond, but the U.S. cannot flood the market with net exports the way Saudi Arabia can.
Why it matters to India:
Even though India does not buy much U.S. crude directly, the American production surge in the last decade has kept global oil prices lower than they otherwise would be, indirectly easing India’s import bill.
2. Saudi Arabia –
Saudi Arabia, producing around 10.8 million bpd, consumes only about a third of that domestically.
The rest roughly 7 million barrels every day is exported.
Through OPEC and its extended OPEC+ alliance with Russia, Riyadh acts as the world’s swing producer.
When prices rise too fast, it can open the taps; when it wants higher prices, it cuts production.
Why it matters to India:
India imports a significant share of its crude from the Middle East.
When Saudi Arabia trims output, freight costs, tanker availability and crude benchmarks like Brent all react, directly influencing the cost of petrol and diesel in Indian cities.
3. Russia –
Russia pumps about 10.7 million bpd, of which only around 4 million bpd is used at home.
The rest traditionally went to Europe, but since sanctions began in 2022, most of it has moved eastward to Asia.
Russia now sells discounted crude to India and China, often below the G7 price cap, and arranges shipping and insurance outside Western control.
Why it matters to India:
Those discounts sometimes $6–10 per barrel below Brent allowed India to keep retail prices steady even when global benchmarks spiked.
If the first part of the story is about who produces the oil, the second part is about who buys it, refines it, and turns it into everyday energy.
This side of the oil map is equally powerful, because demand is what keeps the pump running.
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China towers over everyone else. It is the world’s single largest crude importer, bringing in around 11.1 million barrels every day.
With domestic demand over 14 million barrels, China’s imports feed a gigantic refining and petrochemical industry. A good portion of the finished fuels and chemicals are exported to Asia and beyond.
Impact on the world: Even a 1% change in China’s demand can nudge global prices up or down.-
India comes next in scale, importing about 5.1 million barrels a day in 2024 37% of which came from Russia after sanctions shifted trade.
What makes India special is its refining power: Reliance’s Jamnagar is the world’s largest refining complex, and plants like Paradip and Nayara are also world-class.
India not only meets its fast-rising domestic demand but exports diesel, petrol and jet fuel across Asia and even to Europe..png)
Impact on the world: India is now the fastest-growing source of oil demand and a key supplier of refined products when others face shortages.
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United States may surprise some as a major importer, even though it is the world’s top producer.
Why? Because U.S. refineries are configured for certain heavy crudes that domestic wells do not supply in enough volume.
At the same time, it exports a huge amount of refined fuels more than any other country showing how complex and two-way oil trade really is. -
South Korea and Japan import almost all their crude because they have negligible domestic reserves.
But both are refining powerhouses and leaders in petrochemical exports.
Their sophisticated plants supply jet fuel, plastics, and specialty chemicals to global markets.
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The story of oil is not just about wells and rigs;
it is about giant buyers turning black crude into everyday life.
Whether it is the petrol that powers a Delhi taxi, the ATF fueling a Seoul-bound flight, or the plastic in a Tokyo smartphone case, it all starts with these import flows and refineries.
India stands out as both fastest-growing consumer and major exporter of refined products, giving it a unique role in the world’s energy future a bridge between producer nations and consuming economies.
After understanding the world’s producers and the big importers,
the question many Indians ask is simple:
“If we are buying oil at a discount, why is India so often blamed, and why don’t we see petrol and diesel prices drop sharply at our pumps?”
It is easy to blame India when a television screen shows arrows of Russian oil ships moving towards our west coast. But when we look closely at the numbers, the picture is more balanced. Before the Ukraine war in 2022, Russian crude hardly counted for India barely 2 percent of total imports. By mid-2025 it makes up 35–40 per cent, about 1.7 to 1.9 million barrels a day. This sharp and visible jump is what global agencies track in real time through shipping satellites. That visibility is one reason New Delhi gets named more often than other buyers.
By mid-2025 India has quietly become one of the world’s great oil refineries for hire. Every day close to 5 million barrels of crude oil flow into our ports. What is striking is how much of that is Russian about 35 to 40 per cent of total imports, up from barely 2 per cent before the Ukraine war. On paper this is a clear saving: Russian Urals and ESPO barrels have traded at six to ten US dollars below Brent for long stretches, cutting India’s annual import bill by billions. But to understand why this matters and why New Delhi is often accused of “funding the war,” we need to follow those barrels after they land.
From the west coast terminals at Sikka, Vadinar and Jamnagar, tankers pump the crude into some of the largest refineries on earth. Inside Reliance’s Jamnagar complex, IOCL’s Paradip plant and Nayara’s Vadinar facility, Russian oil is mixed with shipments from Saudi Arabia, Iraq and the US. Within days it is transformed into diesel for lorries, petrol for cars and bikes, aviation turbine fuel for airlines, and petrochemical feedstocks for plastics, fibres and medicines. India’s own demand is growing the fastest in the world, so a big part of this output stays home. Yet a striking share flows back out to sea.
Latest customs and industry figures show that India is now the second-largest exporter of refined petroleum products globally, with shipments worth about US$70 billion in 2024 and still rising in 2025. On an average day in 2024 mid 2025, about 260 thousand barrels of diesel and jet fuel went to Europe, where the Netherlands’ Rotterdam hub alone absorbed roughly 90 thousand barrels per day for re-distribution across the EU. Other steady European buyers include Spain, France, Italy and Greece. Beyond Europe, Singapore takes around 220 thousand barrels daily as a storage and trading hub; the UAE and other Gulf states about 180 thousand barrels; and West African markets such as Togo another 150 thousand barrels. Neighbours like Bangladesh and Sri Lanka buy regular cargoes too. Private refiners such as Reliance and Nayara Energy are major players Nayara alone exported about 3 million tonnes of fuels in the first half of 2025, close to 30 per cent of its output.
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These flows explain the unusual international criticism. Legally, once crude is refined the product is no longer of Russian origin, but politically, European leaders still see these cargoes as Russian molecules in a different disguise. For India the logic is more straightforward: cheap feedstock supports a huge refining and export business, earns foreign exchange, and keeps domestic supply steady.
The natural question at home is different: if India is importing cheap crude and earning from exports, why do Indian motorists still pay close to ₹100 a litre for petrol? The answer lies in how the savings are used. Public-sector oil companies (IOC, BPCL, HPCL) held pump prices steady through the violent swings of 2022–23, booking heavy under-recoveries. The Russian discount helped them gradually wipe out those losses rather than cut prices further. At the same time, taxes remain a large fixed slice of every litre 45 to 50 per cent of the final price and in April 2025 the Centre even raised excise duty by ₹2 per litre. From mid-2022 a windfall tax on crude and export duties on fuels have together brought the exchequer an estimated ₹1.3 lakh crore, money that helped fund LPG subsidies and reduce the fiscal deficit.
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The combined effect is easy to see in a single graph: while the share of Russian oil in India’s imports climbed from 2 per cent in 2021 to nearly 38 per cent in 2025, the average Delhi petrol price moved only from ₹96 to about ₹100. In other words, the gain has been used to hold prices steady and support the budget, not to slash pump rates.
Seen whole, this is less a tale of secretly funding conflict and more a picture of careful national economics. India buys discounted crude wherever it can, refines it into high-value products for both domestic and overseas markets, and uses taxes and export earnings to stabilise its own economy. The immediate beneficiaries are obvious refining companies and government revenues but ordinary citizens also gain in a quieter way: stable fuel prices mean lower food and transport inflation and a smoother household budget than many countries enjoyed when global energy markets turned volatile.
In short, India has turned the chance of cheap Russian oil into a buffer for 1.4 billion people, even if the relief shows up more as stability than as cheaper petrol at the pump.
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