Russia turns to India for gasoline as drone strikes cripple refineries

Top Russian energy companies have approached Indian refiners for additional gasoline supplies as Ukrainian drone strikes have knocked out a large share of Russia's refining capacity, Reuters ↗ 2.29% reported on Tuesday. The move deepens an energy relationship that has seen India emerge as both the largest buyer of Russian crude oil and, in an unusual reversal, a supplier of refined fuel back to Moscow.reuters

A Refining Crisis Deepens

Russian gasoline production has fallen to a level covering only about 65 percent of seasonal demand after a wave of Ukrainian drone attacks halted operations at several major facilities, according to Reuters calculations published on July 10. The shortfall widened to between 40,000 and 45,000 metric tons per day in early July, up from a 25 percent deficit in June.reuters

The crisis intensified after Ukraine struck the Omsk refinery — Russia's largest and its top gasoline producer — on July 6, forcing a halt in operations. That attack, one of the longest-range strikes of the war at roughly 3,000 kilometers, was part of a broader campaign that Ukraine's General Staff says has now disabled 42.7 percent of Russia's designed oil refining capacity. The Saratov refinery, another major gasoline producer, also stopped processing after a separate drone strike.reuters+3

Russia has responded by banning exports of diesel, gasoline, and jet fuel, and by seeking imports from multiple countries. At least 60,000 metric tons of gasoline had already been shipped from India to Russia by early July, with Moscow planning to import roughly 400,000 tons monthly from various sources including Belarus.reuters+2

India Cashes In on Tight Markets

Indian refiners are positioned to benefit from the disruptions. Oil-product shipments from India are on track to reach about 1.4 million barrels per day in July — a 10-month high that is roughly a fifth higher than a year earlier and nearly 50 percent above May volumes, according to Kpler vessel-tracking estimates cited by Moneycontrol.moneycontrol

Strong profit margins for diesel, jet fuel, and gasoline have encouraged Indian processors to maximize throughput, said Sumit Ritolia, lead analyst for refining supply at Kpler, noting that lower Russian product exports have tightened global fuel balances. India's refiners have been running at full capacity, aided by continued flows of discounted Russian crude — more than half of India's total oil imports in July.moneycontrol

Geopolitical Crosscurrents

The deepening India-Russia fuel trade comes amid rising political pressure. U.S. senators on Tuesday unveiled an updated Russia sanctions bill that would use tariffs of up to 100 percent on top purchasers of Russian energy to pressure countries including India and China to reduce their dependence. Meanwhile, India cut its fuel export taxes this month as domestic stockpiles swelled, though officials have warned that further Middle East disruptions could prompt limits on outbound shipments.reuters+1