The narrative went in one direction for 3 years. Washington and Brussels allege that New Delhi has become a washout station for Kremlin oil dollars, as India purchases cheap Russian crude, refines it and sells it to Europe and other markets. Now, that's a tale that's flipped. At least 60,000 metric tons of Indian crude has reached Russia since the end of June, while two additional tankers loaded with 30,000 to 40,000 tons each are already on the water, industry sources told Reuters. The nation that the west was pressured for last two years for Russian energy purchases is now, according to several sources, holding up Russia's fuel supply.

The reversal is explained in the context. Ukrainian drone attacks on Russia have reduced the country's capacity to refine crude oil by between 25 and 30 percent until 2026, specifically the catalytic cracking and hydrocracking units that turn crude into usable petrol and diesel. Those units are known to be slow to repair. This leads to the shortfall in domestic fuel at the peak of fuel consumption, which occurs in the summer, when the consumption of Russian gasoline is around 110,000 tons per day. As the nation's eleven time zones have witnessed a lineup at pumps, prices have reached record levels and some areas have introduced rationing. President Putin has been willing to admit the shortages publicly, though he tried to downplay their severity. In response, Moscow has been doing its shopping around, ordering cargoes from Kazakhstan, increasing rail shipments from Belarus (which saw an increase in shipments of nearly triple in the first half of June than it had done a month earlier) and now, apparently, from India.

Trade data provides the paper trail to the story. Kpler figures shared with Indian business press show that the country's total petrol exports jumped 84 percent in June, from 169,000 barrels a day in May to 311,000. Most of that growth was in a category that analysts call "unknown destinations" – that's for cargo which cannot be traced to its destination. It increased from virtually nothing at all, 410 barrels a day, in May to 90,700 b/d in June, the largest increase since January in the chart's history. No one is saying this is proof of a direct sale to Moscow. However, the timing, magnitude and direction of the surge is just right for the Russian shortage to be coincidental.

The closest to an official confirmation has been provided by petroleum minister Hardeep Singh Puri who said it was "possible" that Indian-origin fuel was reaching Russia via international traders but no Indian company was selling directly. The gasoline in question was being refined by Nayara Energy, two sources, neither of which sought to be identified by Reuters, said, adding that the private refiner is about half-owned by Russian companies, including Rosneft, which bought out Essar in 2017. Last year, the European Union imposed sanctions on Nayara for exactly such a Russian crude-to-refined product pipeline, depriving the refiner of EU shipping insurance and financial services, and effectively transferring the responsibility for bringing crude to the refiner as well as the task of shipping products to such trading middlemen. The Cameroon-flagged vessel was loading petrol in June, and paid for the shipments with a tanker invoice reviewed by Reuters, before sailing for the well-known transshipment hub of Fujairah where cargo origin can be switched without notice.

India's official position is that none of this affects the legality of its trade. Its supply chain for crude now includes over 41 countries; its refined product sales go anywhere as long as there is a price; and make no mistake, it's the same double standard that the West was guilty of when Indian refiners were buying cheap Russian barrels to stop global oil prices rising after 2022, officials say. There is some statistical support for that argument. India is still the fourth largest exporter of petroleum products and one of the few refining centres in the world which have true spare capacity, primarily at Jamnagar complex of Reliance, Mangalore Refinery & Petrochemicals and at Nayara. Here they could force aside about 300,000 b/d of excess petrol; and somebody always was going to be interested in buying it.

The long-term scenario is that Russia-India relations have become more of an infrastructure than a war-time measure. The story of crude flows is evident by themselves. India's import of Russian oil in June surged to a record 2.6 to 2.7 million bpd, compared with 36.5 percent crude oil imports from Russia a month ago. As Middle Eastern supply returns to normal, the share is likely to fall back to the 40-45 percent level, but not as much of a discount value and more as a hedge against the next Gulf disruption, which has been plentiful this year, trade analysts tracking the flow of tankers are saying. Washington's stance has been shaky in reaction. Last August, tariffs on Indian products rose to 50 percent just to punish Russia for its oil purchases while a vague promise to diversify was made in February, and a quartet of Republicans and Democrats in the Senate is now advocating a new sanctions bill, this time targeting energy-buying countries, including India.

The petrol shipments do not add to a complicated trade, but provide a second layer to it. It's not just about India purchasing Russian crude oil at low cost. It's about Indian refineries, which are now operating on the same discount price and able to sell finished fuel back into a Russian market that can't make enough of its own. The sanctions targeting crude oil flows were never intended to stop refined products from passing through third-country traders, or flag-of-convenience tankers, and that's where this trade is happening. It's either clever arbitrage, or a loophole in the sanctions or just a typical thing that energy markets do when they're short of it.