There has been a lot of confusion recently as to who exactly is profiting from Russian oil. After all, Ukraine (a Western ally) is at war with Russia. In spite of this, Russia has been able to fend off NATO successfully due to its robust economy fueled largely by its natural resources that countries around the world can’t seem to get enough of. Let’s dig into who’s really behind their oil trade, and it’s not who they’re saying it is:
Who Really Profited From Russian Oil?
As President Trump and his Administration press forward with efforts to rebalance global trade and secure fairer terms for American workers, India has increasingly been drawn into the debate. Washington’s concern over trade deficits and market distortions is not without merit, and the Administration has sought leverage across multiple sectors to advance its goals. Yet in this push, India’s purchase of Russian oil has become an outsized point of contention. While it is tempting to frame the issue as Indian refiners exploiting discounted barrels for massive profits, the evidence shows this narrative is misplaced.
Making oil the focal point risks overlooking where the true imbalances lie—and distracts from the Administration’s broader mission of strengthening America’s economic position while pursuing peace abroad. The narrative amidst this trade standoff suggests Indian refiners are minting billions by buying cheap Russian oil, refining it, and exporting the products. But before making oil a focal point of its engagement with India, U.S. officials should consider data pointing to American and European oil majors benefiting from the Russia-Ukraine war over India.
The charge of “profiteering” has been voiced by figures such as former White House trade advisor Peter Navarro and, more recently, Treasury Secretary Scott Bessent. While such concerns reflect unease in Washington over shifting energy flows, the numbers do not support the claim that Indian refiners have made extraordinary profits from Russian barrels.
The Myth
If Indian companies were really raking in excess profits, their refining margins would show it. Instead, the evidence reveals the opposite. Russia’s share of India’s oil imports rose dramatically—from under 2% in 2021 to about 33% in 2024. But Gross Refining Margins (GRMs) for Indian refiners between FY22 and FY25 actually fell. By FY25, GRMs were lower than when the conflict began—hardly proof of windfall profits.
Yes, the world saw a temporary spike in refining margins when the war disrupted energy markets. In CY22, margins doubled for India’s BPCL and for Marathon Petroleum in the U.S. Shell’s refining margins more than tripled, climbing from $4.79 per barrel in CY21 to $18.03 in CY22. European major Total Energies also saw a surge, and U.S. refiner Phillips 66 nearly tripled its margins.
By comparison, Reliance Industries—the Indian company often singled out—reported a profit before tax of roughly $6 billion in FY23, about 20% higher than FY22. That is far from the extraordinary numbers suggested in some U.S. commentary. Contrast this with Western players: Valero Energy’s net profit 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 reach $59 billion.Meanwhile, India’s state-run refiners—IOCL, BPCL, and HPCL—suffered losses due to under-recoveries during this same period. Even Reliance’s disclosures show crack spreads (the difference between crude costs and refined product prices) sitting below five-year averages. The hard evidence demonstrates that Western oil companies, not India, were the ones to reap extraordinary gains.
The Geopolitics of Energy
The political debate is not just about numbers—it is also about strategy. The U.S. has alternated between tacit approval of Indian purchases of Russian oil and public criticism. The reasoning lies in a delicate balancing act: keeping global oil markets stable while squeezing Moscow’s revenues.
When Russia invaded Ukraine in February 2022, oil prices surged above $100 per barrel. Fearing a price shock, the U.S. authorized a historic release of 180 million barrels from the Strategic Petroleum Reserve. By September that year, the G7 introduced a price cap on Russian crude, allowing imports below $60 a barrel. The logic was straightforward: let Russian oil keep flowing, but limit Moscow’s earnings. This position reflected market reality. China was already absorbing close to its maximum volume of Russian crude, importing above 2 million barrels a day.
India, with its large and sophisticated refining sector, became the natural clearing house for displaced Russian barrels. Unlike China, India does not rely on shadow banking or opaque shipping networks to skirt sanctions. Its oil trade generally remains within global policy frameworks. This was evident when India fully halted imports of Iranian crude during the Trump administration once secondary sanctions were announced. Nevertheless, today India finds itself in the crosshairs of a new political reality. U.S. leadership is stronger than when this market-based position was adopted—and President Trump and his Administration is working tirelessly to forge peach between Russia and Ukraine while righting trade imbalances around the world.
The Tariff Question
That context makes the current discussion of tariffs critical. To win on peace and trade, the Administration needs to direct its focus in the right spots, and the focus on oil risks overplaying a hand and unintended consequences. President Donald Trump, for instance, floated the idea of imposing an additional 25% tariff on Indian goods over Russian oil purchases. If India’s 1.5–2 million barrels per day of Russian crude were suddenly removed from the market, the global consequences would be severe. Oil prices would spike sharply, stoking inflation not just in India but in the U.S. as well. While some of those barrels could in theory be redirected to China, Beijing is already near its absorption limit. In short, cutting India off from Russian oil would not punishNew Delhi so much as destabilize global prices—and American consumers would feel the pinch at the pump.
Sorting Fact From Narrative
Against this backdrop, accusations of “profiteering” look increasingly misplaced. Yes, India has increased its imports of Russian crude. Yes, its refiners process and export fuel derived from it. But the profit margins have not been extraordinary—certainly not when compared with the staggering windfalls of Western oil majors over the past two years.
Secretary Bessent’s concerns over arbitrage reflect a genuine unease about how energy flows are reshaping geopolitics. But the charge that Indian refiners are uniquely profiting misses the larger picture. In fact, data shows India’s gains have been modest while U.S. and European oil giants have been the real beneficiaries.
The Bottom Line
India has not broken with global policy frameworks. It has operated within the price cap, absorbed barrels others could not, and provided stability to global oil markets at a time of crisis. If anything, its role has helped prevent even greater oil price spikes that would have hurt American consumers.
That leaves a final question: who truly arbitraged the Russia-Ukraine war? The numbers point not to India, but to Western oil companies whose profits reached record highs. Recognizing this reality is essential for applying diplomatic and economic pressure most effectively in furtherance of the President’s goals.
Often times we blame foreign countries for our problems, when in fact, the problems stem from greed within our borders
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