In August 2025, Ukraine launched its largest-ever drone offensive, striking deep into Russia’s oil refining network. Ukrainian drones targeted several of Russia’s biggest refineries, including key facilities in Syzran and Krasnodar, as well as critical infrastructure such as the Druzhba pipeline and the Ust-Luga terminal.
Ukraine’s Drones Hit Russia’s Oil Heartland
The attacks left these refineries smouldering, reducing Russia’s oil refining capacity by nearly 20%. This equated to about 1.1 million barrels per day (bpd) offline, delivering a significant blow to domestic fuel supply. With operations disrupted at 10 major refineries, Russia faced an immediate fuel crunch.
To prevent crude oil from going to waste, Moscow increased exports by around 200,000 bpd. While this move eased immediate logistical strain, it worsened domestic fuel shortages. The strikes highlighted the vulnerability of Russia’s energy infrastructure and underscored how sensitive global oil logistics can be to sudden disruptions.
Ukraine pounds Russia’s energy network, striking 8-N oil station and Ilsky oil refinery
India Seizes the Opportunity
Halfway across the world, Indian refiners quickly capitalised on the disruption in Russia. With Urals crude now trading USD5-USD6 below Brent crude, India’s oil companies saw a rare opportunity to source cheaper crude.
Major refiners like Reliance Industries, Nayara Energy, Indian Oil Corporation, Bharat Petroleum, and Hindustan Petroleum stepped up their purchases. Analysts at Jefferies estimate that Reliance alone could gain around USD500 million in annual additional EBITDA from this discounted crude. While this accounts for roughly 2.1% of Reliance’s projected FY27 consolidated EBITDA, the larger value comes from improved refining margins rather than the crude discount alone.
Reliance reported a strong refining quarter, citing transportation fuel cracks rising between 7%-17%. Their total oil-to-chemicals (O2C) EBITDA reached INR14,511 crore, a 10.8% increase from the previous year. Even with a planned shutdown of one crude unit, secondary units ran at full capacity, benefiting from advantageous feedstock.
The company also leveraged growing gasoline demand in India, which rose nearly 7%, and the surge in global diesel cracks due to geopolitical tensions. This allowed Reliance to increase both domestic sales and exports to Europe, Africa, and Singapore.
Reliance’s retail arm, Jio-bp, also benefited. Diesel sales grew 34% year-on-year, and gasoline sales jumped 39%, leading to an overall growth of 35%. With nearly 2,000 retail fuel outlets, Reliance now controls over 6% of India’s diesel market and 3.6% of petrol sales. Cheaper Russian crude, combined with strategic retail campaigns, significantly boosted their domestic market share.
While some analysts remain cautious, estimates suggest India’s total benefit from Russian crude discounts is around USD2.5 billion annually. Even after accounting for logistics and insurance, refiners still gain an incremental margin of about USD1.0-1.2 per barrel.
India joins Malabar naval drill with US Japan and Australia in Guam as tariff issues continue
Reliance management noted that Europe’s upcoming sanctions on Russian diesel could further impact margins. If Russian flows are blocked, diesel cracks could rise sharply, similar to the post-2022 sanctions period. With the flexible Jamnagar refinery, Reliance could adjust crude sourcing and redirect exports as needed.
Unlike China, where refineries are offline for maintenance, Indian facilities are running at full capacity. This allows them to process more Russian oil and increase exports. In August 2025, India’s diesel exports to Europe jumped 137% to 242,000 bpd, coinciding with Europe’s push to cut Russian oil imports.
Energy analysts highlight India’s emerging role as a swing supplier. Sumit Ritolia from Kpler notes that European buyers may accelerate diesel imports ahead of sanctions taking effect in January 2026. This positions India as a critical middle-distillate supplier during global market volatility.
Global Reactions and Domestic Resolve
India’s energy gains have drawn international attention. The United States imposed tariffs of up to 50% on Indian goods, claiming the purchases of discounted Russian oil support Moscow’s war efforts.
New Delhi, however, has maintained its stance. Finance Minister Nirmala Sitharaman emphasised that India will make sovereign decisions based on affordability, reliability, and national interest. She stressed that ensuring affordable energy for citizens is a key priority.
Diplomatic ties with Russia strengthened as well. Prime Minister Modi’s recent meeting with Vladimir Putin in Tianjin highlighted a “special and privileged” relationship. Putin is scheduled to visit Delhi in December 2025, further solidifying strategic energy cooperation.
Ukrainian forces hit Ryazan oil refinery in Russia raising concerns over fuel infrastructure
Analysts caution that the Urals crude discount may be temporary. If Russia repairs its damaged refineries or countermeasures are taken, India’s advantage could decrease. A potential loss of USD5 per barrel across 1.8 million bpd could increase India’s import bill by USD9-11 billion annually.
Nevertheless, India’s diesel exports and refining gains demonstrate how the country is capitalising on shifting global energy dynamics. For companies like Reliance, discounted crude and high refining cracks present both immediate profits and strategic positioning in the global fuel market.
India’s actions show how a geopolitical crisis far away can create significant opportunities in energy markets, provided refiners and policymakers act swiftly and decisively.