India becomes the 2nd largest supplier of refined oil to Europe, thanks to cheap Russian crude

India has become the European Union’s second-largest supplier of refined petroleum products in 2023, despite relying almost fully on imported crude, thanks to the availability of cheap Russian oil imports. Since Russia’s invasion of Ukraine and the imposition of several trade sanctions on Moscow, Saudi Arabia has been the largest supplier of refined petroleum products to Europe.

According to reports, the European Union imported a cumulative 7.9 million tonnes of refined petroleum products from India between January and September of this year. This figure is more than double the amount on a yearly basis and triple the volumes from the same period in 2021. India’s refined petroleum products volume for this year catapulted it from sixth place in 2022 to first place in 2023. France, the Netherlands, and Italy emerged as the three biggest importers, followed by Croatia, Latvia, Romania, and Germany.

India holds the position of the second-largest oil refiner in Asia after China. The country imports around 40 percent of the crude oil it refines from Russia, with volumes increasing exponentially due to a discount on Russian crude oil amidst Western sanctions. Interestingly, Russian crude continues to make its way into European markets indirectly via alternative channels. The Centre for Research on Energy and Clean Air (CREA), Bulgaria’s Black Sea, Neftochim Burgas refinery imported over 4.95 million tonnes of Russian crude between January and October 2023.

Bulgaria was granted an exemption from the EU’s Russian oil embargo implemented in late 2022 in order to ensure sufficient domestic supply. However, Russian oil is being supplied to the European markets via India (refined oil) and crude through smaller countries in Europe. CREA finds Bulgaria as the fourth-largest imported of Russian seaborne crude, after India, China, and Turkey. It is worth mentioning here that Western countries led by the United States of America and the European Union imposed economic and other trade sanctions on Russia after its offensive in Ukraine in February 2022.

Diesel exports
Europe suspended most oil shipments from Russia almost a year ago, but continued to buy diesel that may well have been made from Russian crude oil. The region's imports of diesel from India, one of the largest importers of Russian crude oil, are on course to soar to 305,000 barrels per day (bpd), the highest since at least January 2017, data compiled by the market intelligence agency Kpler showed.

Since India imports crude oil from other countries such as Saudi Arabia, Iraq, Iran, and a number of other countries, it cannot be accurately said that New Delhi’s diesel exports to Europe is made of Russian crude. However, given that the volume of exports increasing significantly, one can easily assume that the diesel being exported to Europe is made of Russian crude. Meanwhile, increasing Moscow’s crude deliveries has given Indian refineries the ability to produce abundant diesel and boost exports.

Arrivals into Europe in November include a rare shipment from Mumbai-based Nayara Energy Ltd, which imported almost 60 percent of its crude oil from Russia this year. Reliance Industries Ltd, Europe’s leading supplier of Indian diesel, draws more than a third of its crude oil from Russia, Kpler reported. This is considered Europe’s fundamental shift towards India after Russia’s invasion of Ukraine. The European Union banned most seaborne imports from Russian crude oil in December and oil products in February.

World beyond the West
Commenting on the rapid change in the global trade order from uni-polarity to multi-polarity, Russian Foreign Minister Sergei Lavrov said, “The world is much more than Europe with an increase in trading partners such as ‘global south’ and ‘global east’. The key difference of the ongoing multi-polarity is the opportunity to acquire genuinely global proportions, relying on the fundamental principle of the United Nations Charter – The sovereign equality of states.”

Speaking at the Primakov Readings International Forum in Moscow, Lavrov said on Tuesday, “Previously, decisions of global importance were driven by a small group of countries with the predominant voice coming from the Western community, for obvious reasons. Today, new players representing the ‘global south’ and ‘global east’ have stepped onto the international political stage and their growing numbers. We can call them ‘global majority’. They are strengthening their sovereignty on addressing pressing issues, demonstrating independence, and prioritizing their national interests rather than someone else’s whims.”

India emerges stronger trade partner for Europe
India has emerged as a stronger trade partner for Europe now than earlier. Decoupled from Russia after the war in Ukraine, Europe was looking for a new trade partner to fulfill the trade in the changed world order. Russia’s conflict with Ukraine was so sudden and severe that it changed the business dynamics and created a new trade order with the entire world dividing into either support or against the war. This war impacted the European countries dramatically being the entire Europe heavily depended upon Russian energy.

The Ukraine war changed the overall perception of many European economies. In fact, no one was expecting this war to be prolonged so much to continue even in the 21st months. Being economic and financial consequences very much associated with the increase in oil and gas prices, European economies immediately tried to reduce dependence on Russian oil and look for alternative suppliers. Now, Europe is taking advantage of a stronger trade relationship with India and the rest of the world to deal with the immediate change in the global energy order.


DILIP KUMAR JHA
Editor
dilip.jha@polymerupdate.com