India has become Europe's largest supplier of refined fuels this month, despite the European Union's ban on seaborne crude oil and refined fuel imports from Russia. The ban was put in place in December 2021 and extended to refined fuels two months later. However, India has been able to snap up cheap Russian crude and turn it into fuels like diesel before shipping it back to Europe at a higher price. According to data from analytics firm Kpler, India is set to supply more than 360,000 barrels a day of refined fuels to Europe, surpassing Saudi Arabia. At the same time, India is buying record amounts of Russian crude, with arrivals expected to surpass two million barrels a day in April, representing almost 44% of the country's overall oil imports.
Viktor Katona, lead crude analyst at Kpler, said that "Russian oil is finding its way back into Europe despite all the sanctioning and India ramping up fuel exports to the west is a good example of it. With India taking in so much Russian barrels, it’s inevitable." The development is double-edged for the EU. On the one hand, the bloc needs alternative sources of diesel now that it has cut off direct flows from Russia, which was previously its top supplier. However, it ultimately boosts demand for Moscow’s barrels, and means extra freight costs. Additionally, it also means more competition for Europe’s oil refiners who can’t access cheap Russian crude, and comes amid wider market scrutiny about where the region’s diesel imports are coming from.
Repsol SA's CEO Josu Jon Imaz has called on authorities to clamp down on the illegal entry of Russian diesel into Europe. However, a preliminary inquiry by Spanish authorities didn’t find evidence of such activity, adding that a probe is ongoing. More than half of Russia’s seaborne oil shipments were to the European Union and Group of Seven nations before the bloc began to cut purchases in response to the nation’s invasion of Ukraine in early 2022.
