The West’s conflict with Russia has brought lucrative business to Indian multi-millionaire Mukesh Ambani, according to Handelsblatt.
For its refineries on the subcontinent’s west coast, it has bought Russian oil at discount prices in recent months. The Reliance group boss moved the finished products, diesel and petrol, to Europe, among others, and reaped rich profits in the face of rising prices in the global market.
But India’s government is now putting the brakes on lucrative deals by crisis speculators like Reliance: On Friday, it announced new export duties on gasoline and diesel. With this step, it could cause further price increases at European petrol pumps.
India has recently been one of Europe’s most important fuel suppliers – and has significantly increased its export volumes since the start of the war in Ukraine.
However, the high profit margins of Indian refiners abroad have led to shortages of petrol and diesel in the domestic market, according to government sources. “Because exports are so profitable right now, we’re seeing some refiners run their pumps dry on the domestic market,” complains the finance ministry in New Delhi.
Despite India’s extensive production capacity, the country has been forced to import more and more fuel from abroad in recent weeks. Diesel imports are at their highest level since February 2020.
The tariffs are now expected to reverse the trend: For every liter of diesel exported, India’s government will charge exporters an extra 13 rupees – the equivalent of 16 cents. For petrol, an additional charge of six rupees should be paid. In addition, companies will be obliged to supply the domestic market with an amount of fuel that is at least half of the volume of exports.
India buys cheap oil from Russia
Share prices of Indian refiners plummeted after the announcement. Shares in Ambani’s Reliance Group lost about nine percent of their value at intervals on the Bombay Stock Exchange. Shares of diesel producer MRPL fell 10%.
European motorists are also affected by the increase in the price of Indian Sprite exports. Gasoline and diesel producers in Asia’s third-largest economy have positioned themselves as a major alternative to supplies from Russia since the start of the war in Ukraine. According to data from service provider Vortexa, India shipped 540,000 tonnes of diesel and petrol to Europe in May, 50 percent more than in the same month last year.
Thus, Indian suppliers are ahead of suppliers from Saudi Arabia and the United Arab Emirates. At 2.6 million tonnes, the majority of Europe’s fuel imports still come from Russia.
India’s bid to make Europe less dependent on Russian supplies was at least partly a sham. It is considered very likely, for example, that Indian fuel for the European market is at least partly produced with Russian crude oil.
While the West has increasingly distanced itself from Russian oil, India has emerged as an important customer: In June, Indian buyers bought an average of 1.2 million barrels per day from Russia, according to data from service provider Kpler.
This is likely to make Russia India’s main supplier for the first time. Before the war in Ukraine, India was buying only small quantities of the commodity from Russia.
Finance Ministry increases import duties on gold
Tycoon Ambani, who is one of Asia’s richest men, got more than a quarter of his oil from Russia in May, according to a report by the Center for Research on Energy and Clean Air think tank. This compares with just 5% the previous month.
According to the analysis, 1/5 of his company’s cargo ships passed through the Suez Canal, suggesting that they were headed for Europe or America. It is not known whether or how much Russian oil fuel was in them.
In recent weeks, fuel shortages have been reported across India, including in the state of Gujarat – the home state of Prime Minister Narendra Modi. Rising fuel prices are also driving India’s inflation: It’s currently around 7%.
The weakness of India’s national currency, the rupee, which fell to a record low against the dollar on Friday, threatens to worsen inflation through higher import costs. To support the currency, India’s finance ministry also on Friday raised import duties on gold, which is traditionally in high demand in India – including for wedding ceremonies.