Despite a nearly year-long ban on most oil shipments from Russia, Europe is witnessing a surge in diesel imports from India, a significant purchaser of Russian crude. Data from market-intelligence firm Kpler indicates that Europe’s diesel imports from India are set to reach 305,000 barrels per day, the highest since January 2017.

Reliance Industries, the top supplier of Indian diesel to Europe, relies on over a third of its crude from Russia. While Europe ceased most seaborne imports of Russian crude in December, the demand for diesel continues, and Indian refineries, backed by Russian crude, have increased their diesel production for export.

The shift in oil trading dynamics after Russia’s conflict in Ukraine is evident. Russia was Europe’s primary diesel supplier a year ago, but the EU’s ban on Russian crude and oil products prompted the region to seek alternatives. India is now bridging the supply gap as European imports from the US, Turkey, and Saudi Arabia decline.

The availability of Russian crude at a discounted rate has given Indian refiners a competitive advantage. Viktor Katona, lead crude analyst at Kpler, stated, “The 1.6-1.8 million barrels a day of Russian crude that Indian refiners buy creates a competitive edge that others do not have.”

As the West distances itself from Russian oil, Moscow finds a growing market in Asia. Indian refiners can purchase Russian crude at a discount and export processed oil to regions like Europe, where diesel remains in high demand.

By Bloomberg