There was a variety of confusion just lately as to who precisely is taking advantage of Russian oil. In spite of everything, Ukraine (a Western ally) is at battle with Russia. Despite this, Russia has been capable of fend off NATO efficiently as a consequence of its sturdy economic system fueled largely by its pure sources that nations around the globe can’t appear to get sufficient of. Let’s dig into who’s actually behind their oil commerce, and it’s not who they’re saying it’s:
Who Actually Profited From Russian Oil?
As President Trump and his Administration press ahead with efforts to rebalance world commerce and safe fairer phrases for American employees, India has more and more been drawn into the talk. Washington’s concern over commerce deficits and market distortions will not be with out advantage, and the Administration has sought leverage throughout a number of sectors to advance its objectives. But on this push, India’s buy of Russian oil has turn into an outsized level of rivalry. Whereas it’s tempting to border the problem as Indian refiners exploiting discounted barrels for large earnings, the proof exhibits this narrative is misplaced.
Making oil the focus dangers overlooking the place the true imbalances lie—and distracts from the Administration’s broader mission of strengthening America’s financial place whereas pursuing peace overseas. The narrative amidst this commerce standoff suggests Indian refiners are minting billions by shopping for low-cost Russian oil, refining it, and exporting the merchandise. However earlier than making oil a focus of its engagement with India, U.S. officers ought to take into account information pointing to American and European oil majors benefiting from the Russia-Ukraine battle over India.
The cost of “profiteering” has been voiced by figures comparable to former White Home commerce advisor Peter Navarro and, extra just lately, Treasury Secretary Scott Bessent. Whereas such considerations mirror unease in Washington over shifting vitality flows, the numbers don’t help the declare that Indian refiners have made extraordinary earnings from Russian barrels.
The Fable
If Indian firms had been actually raking in extra earnings, their refining margins would present it. As a substitute, the proof reveals the other. Russia’s share of India’s oil imports rose dramatically—from below 2% in 2021 to about 33% in 2024. However Gross Refining Margins (GRMs) for Indian refiners between FY22 and FY25 really fell. By FY25, GRMs had been decrease than when the battle started—hardly proof of windfall earnings.
Sure, the world noticed a brief spike in refining margins when the battle disrupted vitality markets. In CY22, margins doubled for India’s BPCL and for Marathon Petroleum within the U.S. Shell’s refining margins greater than tripled, climbing from $4.79 per barrel in CY21 to $18.03 in CY22. European main Complete Energies additionally noticed a surge, and U.S. refiner Phillips 66 practically tripled its margins.
By comparability, Reliance Industries—the Indian firm usually singled out—reported a revenue earlier than tax of roughly $6 billion in FY23, about 20% increased than FY22. That’s removed from the extraordinary numbers steered in some U.S. commentary. Distinction this with Western gamers: Valero Vitality’s internet revenue jumped 900% to $11.5 billion in CY22, Marathon Petroleum’s rose 205% to $3.7 billion, and ExxonMobil’s earnings ballooned by $36 billion to achieve $59 billion.In the meantime, India’s state-run refiners—IOCL, BPCL, and HPCL—suffered losses as a consequence of under-recoveries throughout this similar interval. Even Reliance’s disclosures present crack spreads (the distinction between crude prices and refined product costs) sitting beneath five-year averages. The arduous proof demonstrates that Western oil firms, not India, had been those to reap extraordinary beneficial properties.
The Geopolitics of Vitality
The political debate is not only about numbers—it is usually about technique. The U.S. has alternated between tacit approval of Indian purchases of Russian oil and public criticism. The reasoning lies in a fragile balancing act: maintaining world oil markets secure whereas squeezing Moscow’s revenues.
When Russia invaded Ukraine in February 2022, oil costs surged above $100 per barrel. Fearing a value shock, the U.S. licensed a historic launch of 180 million barrels from the Strategic Petroleum Reserve. By September that 12 months, the G7 launched a value cap on Russian crude, permitting imports beneath $60 a barrel. The logic was easy: let Russian oil maintain flowing, however restrict Moscow’s earnings. This place mirrored market actuality. China was already absorbing near its most quantity of Russian crude, importing above 2 million barrels a day.
India, with its giant and complicated refining sector, turned the pure clearing home for displaced Russian barrels. Not like China, India doesn’t depend on shadow banking or opaque delivery networks to skirt sanctions. Its oil commerce typically stays inside world coverage frameworks. This was evident when India totally halted imports of Iranian crude through the Trump administration as soon as secondary sanctions had been introduced. Nonetheless, right now India finds itself within the crosshairs of a brand new political actuality. U.S. management is stronger than when this market-based place was adopted—and President Trump and his Administration is working tirelessly to forge peach between Russia and Ukraine whereas righting commerce imbalances around the globe.
The Tariff Query
That context makes the present dialogue of tariffs crucial. To win on peace and commerce, the Administration must direct its focus in the precise spots, and the concentrate on oil dangers overplaying a hand and unintended penalties. President Donald Trump, as an illustration, floated the thought of imposing an extra 25% tariff on Indian items over Russian oil purchases. If India’s 1.5–2 million barrels per day of Russian crude had been all of the sudden faraway from the market, the worldwide penalties could be extreme. Oil costs would spike sharply, stoking inflation not simply in India however within the U.S. as nicely. Whereas a few of these barrels might in principle be redirected to China, Beijing is already close to its absorption restrict. Briefly, slicing India off from Russian oil wouldn’t punishNew Delhi a lot as destabilize world costs—and American customers would really feel the pinch on the pump.
Sorting Truth From Narrative
Towards this backdrop, accusations of “profiteering” look more and more misplaced. Sure, India has elevated its imports of Russian crude. Sure, its refiners course of and export gas derived from it. However the revenue margins haven’t been extraordinary—actually not compared with the staggering windfalls of Western oil majors over the previous two years.
Secretary Bessent’s considerations over arbitrage mirror a real unease about how vitality flows are reshaping geopolitics. However the cost that Indian refiners are uniquely profiting misses the bigger image. The truth is, information exhibits India’s beneficial properties have been modest whereas U.S. and European oil giants have been the actual beneficiaries.
The Backside Line
India has not damaged with world coverage frameworks. It has operated throughout the value cap, absorbed barrels others couldn’t, and supplied stability to world oil markets at a time of disaster. If something, its position has helped stop even higher oil value spikes that may have damage American customers.
That leaves a last query: who really arbitraged the Russia-Ukraine battle? The numbers level to not India, however to Western oil firms whose earnings reached file highs. Recognizing this actuality is crucial for making use of diplomatic and financial stress most successfully in furtherance of the President’s objectives.
Typically occasions we blame international nations for our issues, when in reality, the issues stem from greed inside our borders