India refused to buy Russian diesel fuel

India, which has become the main recipient of Russian oil, which Western countries have given up, will not save the Russian oil industry from the European diesel embargo.

Indian refiners will not buy Russian diesel, Reuters reports, citing industry sources and refinery representatives.

According to one of them, the costs of imports, including freight and insurance, are too high and exceed the “cap” imposed by the G7 countries – $ 100 per barrel.

India is completely self-sufficient in diesel, a source at the refinery told Reuters. And buying Russian fuel for re-export is unprofitable due to India’s Excess Profit Tax, he explains.

According to Reuters sources, India is ready to buy only the cheapest Russian oil products. Thus, Reliance Industries, the owner of the world’s largest refinery complex, increased imports of Russian naphtha in February and tripled purchases of heating oil. Bharat Petroleum and Indian Oil, which need gasoline as a cheap feedstock for petrochemicals, can follow suit.

On February 5, the European Union introduced a ban on sea transport of Russian petroleum products, while setting a “maximum price”. Historically, Russia exported half of the production of petroleum products – about 144 million tons out of 290 million. At the same time, 90% went to the European market, which is currently closed by sanctions, say Alfa-Bank analysts.

Finding buyers for these quantities in Asia will be much more difficult than for oil, they warn: “India and China are more interested in developing their own refinery infrastructure to replace Russia in world markets.”

Due to the sanctions, refiners are preparing to cut production by 15%, he said earlier Reuters a high-ranking source familiar with the government’s plans.

According to the IEA, in 2022 Russia exported an average of about 1.2 million barrels of petroleum products per day. The closed European market will reduce volumes by a factor of 5 – by the end of the first quarter, about a million barrels of daily exports will remain without buyers, BCS analyst Ronald Smith estimates.

“The embargo on petroleum products could be more significant than the oil embargo,” warns Smith of the BCS. Authorities hope the problem will be resolved in the second half of the year when new supply chains are established, a source told Reuters.