While United States and Europe are currently facing hikes in the prices of oil and commodities due to the sanctions placed, India is buying up the sanctioned Russian oil at a discounted price of $35 off a barrel and then refines it.
"They are selling it to U.S. and European Union (EU) for massive profits," the Wall Street Journal reported.
India's imports of Russian crude hit a record high in May, data from commodity analyst Kpler shows. The South Asian country imported 840,645 barrels per day (bpd) of Russian crude in May, up from 388,666 bpd in April and 136,774 bpd in May last year, according to Kpler.
June imports will be at an estimate of 1.05 million bpd. Russia's share of India's total imports will rise to just under one quarter, a dramatic spike considering that they were around two percent of the total last year.
The U.S. gave India permission to import Russian oil following India's threat to stop being America's ally and just form an alliance with China.
The fuel that was believed to be partially made from Russian crude came to New York and New Jersey last month through the Suez Canal and across the Atlantic from Indian refineries, according to shipping records of Refinitiv Eikon data and analysis by Helsinki-based think tank Center for Research on Energy and Clean Air.
The Indian energy giant Reliance Industries Ltd. bought seven times more Russian crude in May, making up a fifth of its total intake, Kpler data indicated.
Without a planned destination, Reliance chartered an oil tanker to carry a cargo of alkylate, a gasoline component, departing from the nearby Sikka port on April 21. Updated records said it discharged its cargo on May 22 in New York.
The EU recently announced a ban on seaborne imports from Russia. Germany and Poland will also end pipeline imports. Around 90 percent of Russia's oil exports to the bloc will end, the EU said.
Because of this, other importers of Russian crude also claimed to end or reduce their imports, including major buyers Japan and South Korea. Australia already banned imports of Russian oil and refined products back in April.
Despite the risk of sanctions, the biggest crude exporter China and third-largest India are still buying increasing volumes because of the cheaper price as compared to other suppliers.
The risk for Indian refiners is that Western buyers of refined exports may begin to target their cargoes for the possibility that the products were refined out of Russian crude.
An example cited by the New Delhi Television (NDTV) website is the Reliance Industries. The company operated a 1.2 million bpd refinery complex at Jamnagar and while it does supply fuel to the domestic market, much of the output is exported.
The port of Sikka handles Reliance's crude imports, and Kpler data shows that 10.81 million barrels of Russian crude arrived in May, or about 348,000 bpd. The same port exported two million barrels of diesel, or about 64,500 bpd, to Australia in May.
NDTV also cited Nayara Energy, which operates India's second-largest refinery.
Nayara is owned by a subsidiary of Russia's Rosneft and a subsidiary of commodity trader Trafigura and it operates a refinery at Vadinar in Gujarat. This port exported 340,000 barrels of diesel to Australia in May, Kpler said.
Reuter's Clyde Russell said it is likely that at some point countries buying and processing Russian crude, and then exporting refined fuels, such as India and possibly China, will find themselves under scrutiny from those governments trying to isolate Russia's energy exports.
"There is the risk of secondary sanctions being imposed, but also of measures to make the physical trade more difficult, such as sanctions on ships that have visited Russian ports, bans on insuring Russian crude cargoes or cargoes of refined products made from Russian oil," he said.
Watch the below video that talks about details of the EU reaching a deal to ban 90 percent of Russian oil.
This video is from the SecureLife channel on Brighteon.com.