India Rises as Global Refining Power Amid Russia’s Cutback From Drone Warfare

As Ukraine intensifies its drone strikes on Russian refineries, India is positioning itself to gain both economically and geopolitically from the disruption. With an estimated 17 percent of Russia’s refining capacity — some 1.1 million barrels per day — disabled by recent attacks, India is capitalizing on cheaper crude and rising demand for non-Russian fuels, particularly from Europe.

What’s Happening

• Refinery damage and export port disruption in Russia have forced a reduction in local processing capacity. Several major plants have been hit, while key Baltic ports such as Primorsk and Ust-Luga have seen damage affecting loading and shipping operations.

• As Russian refining weakens, more crude oil that would have been refined domestically is being exported. This increases supplies of discounted Russian oil on global markets.

• Europe is preparing for a ban from January 2026 on fuels refined from Russian crude, leading to a rush for supply alternatives. India has stepped in to fill that gap.

India’s Gains

1. Massive Export Growth
   In August 2025, India’s diesel exports to Europe rose about 137% year-on-year, reaching approximately 242,000 barrels per day, driven by anticipation of the EU ban on fuels from Russian crude.

2. Stronger Refining Margins
   Lower crude purchase costs from Russia, combined with tight global diesel supplies, have boosted profit margins (crack spreads) for Indian refiners. Industry analysis suggests significantly improved returns for companies such as Reliance and IOC.

3. Geopolitical and Strategic Leverage

   • India has rejected U.S. pressure to reduce oil imports from Russia, insisting procurement is driven by cost and security.

   • By serving as a swing supplier — especially to Europe — India gains influence in global energy flows.

4. Filling Supply Gaps

   • While Chinese refineries undergo maintenance, Indian plants are running at full capacity, processing more Russian crude and expanding exports.

   • The EU’s sanctions are triggering stockpiling, which India is able to supply.

Risks & Challenges Ahead

• U.S. Tariffs & Diplomatic Pressure: The U.S. has imposed tariffs up to 50% on certain Indian goods, aiming to penalize energy ties with Russia.

• EU Sanctions Compliance: Proof of crude origin will become critical; Indian refineries often process mixed sources, raising documentation hurdles.

• Logistical Constraints: Shipping, storage, insurance, and port capacity may limit sustained export growth.

• Russian Recovery: If Russia repairs damaged facilities, discounts may narrow.

• Volatile Prices: A prolonged conflict risks further oil market shocks.

Expert Views

• Analysts estimate 17–20% of Russian refining capacity has been disabled in recent months.

• Some believe India could sustain high refining margins through late 2025 due to European demand and seasonal cycles.

• Others caution that tariffs and sanctions could offset economic gains if not managed.

If Ukraine’s drone attacks continue to constrain Russian refining, India is likely to:

• Secure crude at steep discounts

• Maintain high refinery utilization

• Expand its role as a key supplier of diesel and refined fuels

• Leverage energy strength for geopolitical advantage

India’s opportunistic energy strategy highlights a core truth of today’s oil markets: disruption creates both risk and opportunity. With its refining capacity, flexible procurement, and export networks, India has turned global upheaval into a chance to cement itself as a powerful player in the oil order.