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Crude Moves: How India is Juggling Russian Oil Deals & Homegrown Reserves
Russian oil exports to India have surged despite extensive sanctions imposed by the West and the US following Russia’s invasion of Ukraine. India has been purchasing Russian crude at a discount, circumventing US sanctions by paying for these imports in Indian rupees.
Russian oil exports to India have increased sixfold, soaring from less than $10 billion pre-Ukraine to over $61 billion in the 2024 fiscal year, accounting for almost 40% of India’s total oil purchases. India’s minister of petroleum and natural gas has stated that the country is prepared to keep buying oil and gas at the lowest possible prices from any source, prioritising India’s economic considerations over geopolitical alignment.
These exports to India are likely facilitated by Russia’s so-called “shadow fleet,” which currently consists of 400 vessels transporting close to 4 million barrels of oil per day. This fleet operates under obscure ownership and offshore registries, making it difficult for Western governments to track or impose sanctions on the vessels involved.
Simultaneously, the EU’s imports of “Indian fuel” have reached record levels. Unprecedented volumes of Russian-origin oil, refined in India, are being re-exported to Europe as fuel. This arrangement, while technically compliant with EU sanctions, occupies a legal grey area by allowing Russian crude to re-enter European markets after refinement. Through this strategy, India has secured discounted Russian oil while benefiting from higher demand in Europe, positioning itself as a key intermediary in the global energy trade.
As India capitalises on its strategic position in the oil market, the country is also focusing on strengthening its domestic production capabilities to reduce its long-term reliance on imports.
India is set to implement major regulatory reforms and invite foreign oil companies to explore its onshore and offshore reserves. The country aims to maximise oil extraction while global demand for crude remains high.
The oil and gas minister has stated that India has “several” oilfields comparable in size to ExxonMobil’s 11 billion-barrel discovery in Guyana—one of the largest recent discoveries in the world. Swift action is needed to exploit these resources before the global transition to alternative energy sources accelerates as part of net-zero climate goals.
Estimates of India’s potential oil reserves vary widely. S&P Global Commodity Insights suggests there could be as much as 22 billion barrels in unexplored basins, while energy consultancy Rystad estimates the figure to be just under 8 billion.
By prioritising regulatory reform and foreign partnerships, India can maximise its oil production, reduce its dependence on costly imports, enhance energy security, and develop untapped reserves while global demand for oil remains robust. Accelerating the discovery and development of large oilfields would boost the economy, create jobs, and further strengthen India’s position in the global energy market.
Meanwhile, state-owned refiner Chennai Petroleum Corporation Limited is seeking a $3.33 billion loan to construct a new refinery in Tamil Nadu. As India expands its refining capacity to meet the rising demands of its growing middle class, it is positioning itself as not just a consumer but a pivotal player in the global energy market. If India successfully unlocks its vast oil potential, it could emerge as a dominant force, reshaping global energy dynamics and securing long-term growth for decades to come.
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