How India’s Oil Imports from Russia Challenge the Sanctions Regime
The web of global geopolitics and the international oil market is a complex one, woven with the threads of national interests, strategic alliances, and economic pragmatism. The narrative of Russian oil reaching European markets via India, despite sanctions aimed at crippling Russia’s war machinery, is a chapter in this intricate saga that has raised many eyebrows. According to a report by The Guardian, India has been buying Russian oil at discounted rates since the invasion of Ukraine, making Russia its biggest source of oil after overtaking Iraq and Saudi Arabia. India’s high imports of crude oil from Russia in fiscal year 2022–23 have helped India enhance exports of diesel and jet fuel to Europe. India has occupied a bigger market in Europe as the continent has shunned Russian products after the war in Ukraine. However, India’s government and the Vadinar refinery, which is partly owned by the sanctioned Russian state-owned oil firm Rosneft, have denied that they are violating the sanctions or exporting Russian oil to Europe.
To unravel this, we must look at the nuances of this dynamic. India, a burgeoning economy with a colossal need for energy, has pragmatically capitalized on the opportunity to purchase Russian oil at discounted prices, given the vacuum left by Western sanctions. This step, while economically advantageous for India, also reflects the delicate tightrope New Delhi walks in its foreign policy — maintaining an amiable distance with the West while nurturing a historical and strategic relationship with Moscow, a partner that has been a mainstay in India’s defense sector for decades. According to the Bank of Baroda, India’s imports of Russian oil rose tenfold in 2022, saving the country around $5 billion. India has defended its oil purchases, saying that it was not in a position to pay higher prices or to jeopardize its energy security. India has also continued to cooperate with Russia on defense and nuclear projects, despite US pressure and sanctions.
The story intensifies with the revelations concerning the Vadinar refinery, owned by Nayara Energy. Nayara’s strategic importance and its links with Russian oil company Rosneft add complexity to the sanctions regime. The optics of a Russian-invested refinery exporting significant quantities of fuel to various markets, including, purportedly, Europe, generates a narrative that sanctions are being circumvented, albeit indirectly. However, Nayara Energy has denied any violation of sanctions and stated that it follows all applicable laws and regulations in its operations. Nayara Energy also claims that it sources crude oil from multiple suppliers, not just Rosneft, and that it exports its products to more than 20 countries, with Europe accounting for less than 10% of its total exports.
The numbers do not support this claim, as the Vadinar refinery exports most of its products to other regions such as Asia, the Middle East and Africa and complies with the sanctions. The amount of Russian oil that may reach Europe through India is insignificant compared to Europe’s total oil consumption, which was about 12.8 million barrels per day in 2022. The claim is based on perception rather than facts, and that the sanctions have not been effective in isolating Russia from the global oil market.
The juxtaposition of the Indian government’s and Vadinar refinery’s denials against the apprehensions voiced by anonymous sources in the oil industry and the European Commission crystallizes the murkiness of the situation. These declarations and refutations underscore the reality that in international affairs, perceptions are often as consequential as the facts.
Indeed, India’s strategic engagement with Russia raises broader questions about the global shift to green energy and how traditional energy alliances may evolve. Russia’s accusation that the West has created a crisis by hastening the transition to green energy without securing alternative energy sources resonates in a world where many economies are not yet equipped to make a complete transition away from fossil fuels.
