Why in News?

• The European Union (EU) plans to ban imports of fuels refined from Russian crude starting January 21, 2026.
• Europe is stockpiling petroleum products, particularly diesel, ahead of the ban.
• Amid this scenario, India has become a major swing supplier of petroleum products to Europe, bringing a fresh perspective to the India-Europe energy dynamics.

What’s in Today’s Article?

• India’s Petroleum Exports to Europe
• India–Europe Energy Dynamics
• Drivers of Export Growth
• Geopolitical Dimensions
• EU Ban on Russian-Origin Fuels
• Challenges and Uncertainties
• Conclusion

India’s Petroleum Exports to Europe:

• Role in India’s economy:
  • India’s petroleum industry is a key driver of foreign exchange earnings and global trade presence.
  • Exports to Europe, a market with high energy demand and stringent quality standards, strengthen India’s position as a reliable global energy supplier.
• Export volumes and revenue:
  • Petroleum exports to Europe in April–January 2024 valued at $18.4 billion.
  • July 2024: Exports rose 26%, reaching 266,000 barrels/day (bpd).
    • Major products: Diesel (238,000 bpd) and aviation fuel (81,000 bpd) exports.
• Historical growth: Between 2018–19 and 2023–24, petroleum exports to Europe surged by over 253,000% in volume and nearly 250% in value, reflecting Europe’s dependence on Indian refined fuels.
• Global export comparison: Top global petroleum exporters - Saudi Arabia (16.2%), Russia (9.14%), Canada (8.48%), while India has carved a growing niche through refined product exports.
• Types of exports:
  • Crude oil derivatives – Diesel, gasoline, naphtha, kerosene, fuel oil.
  • Refined petroleum products – Aviation turbine fuel (ATF), industrial fuels.
  • Petrochemicals – Polypropylene, polyethylene, and polymers for manufacturing.
• Strategic importance:
  • Europe’s steady energy demand and India’s advanced refining capacity provide mutual benefits.
  • The trend underscores India’s growing role in global energy trade, while exporters can leverage logistics solutions to expand further.

India–Europe Energy Dynamics:

• India’s diesel exports to Europe:
  • It jumped to around 260,000 barrels per day (bpd) in August 2025, up nearly 63% over July 2025 and 103% over August of last year.
  • India’s total petroleum product exports to Europe in August jumped 41% month-on-month to nearly 399,000 bpd.
• Largest exporter: All of India’s diesel exports to Europe in August were from Reliance Industries (RIL), the country’s largest private sector refiner and petroleum product exporter.

Drivers of Export Growth:

• EU stockpiling ahead of the 2026 sanctions.
• Advancing of maintenance shutdown of Shell’s Pernis refinery in the Netherlands from 2026.
  • This is as part of Europe's strategy to make sure its own refineries are not hampered by turnaround schedules once the January 2026 ban goes into force.
• West Asia refinery maintenance expected in late 2025, reducing supplies to Europe.
• India’s role as a swing supplier of middle distillates (diesel, jet fuel, kerosene).

Geopolitical Dimensions:

• Western concerns: US and Western allies allege India is profiteering by refining discounted Russian crude and exporting products to Europe.
• India rejects allegations, emphasizing:
  • Import of Russian crude is legal.
  • Export of refined fuels is within global trade norms.
  • Countries objecting can stop importing from India.

EU Ban on Russian-Origin Fuels:

• The EU had already banned direct imports of Russian petroleum products in February 2023.
• From January 2026, the ban extends to fuels refined from Russian crude, even if processed in third countries.
  • Exemptions: Canada, Norway, Switzerland, UK, and US.

Challenges and Uncertainties:

• Enforcement issues:
  • Refineries process mixed crude baskets (60–70% non-Russian in India).
  • Difficult to differentiate refined fuels from Russian vs. non-Russian crude.
  • RIL operates two separate refining systems, aiding compliance flexibility.
• Impact on India: If Europe halts imports from India -
  • Impact may be transitory.
  • India can divert exports to other markets.
  • Global fuel flows would adjust (e.g., Europe sourcing more from West Asia, India shifting to markets served by West Asia).

Conclusion:

• India’s growing role as a swing supplier of petroleum products positions it as a critical player in Europe’s energy security and India-Europe energy dynamics during the transition away from Russian crude.
• Going forward, India must leverage this opportunity to strengthen its global energy trade while preparing for policy shifts like the 2026 EU ban through market diversification and diplomatic engagement.