A line flickered through the news feed that looked like a typo: Russia, a country that had been the world's largest exporter of petroleum products for decades, imported a record 172 thousand tons of fuel in August. Seventy percent of that volume came from India, and ninety-four percent of the gasoline came from a single refinery—Vadinar in Gujarat.
What comes next is what made it worth digging into. Vadinar belongs to Nayara Energy, in which Rosneft holds 49.13%, with another 49% held by the Russian fund United Capital Partners. In the first eight months of 2026, the refinery sourced crude exclusively from Russia. In other words, Russia pays a refinery it controls to process its own oil into gasoline it can no longer produce at home—and ships it back around half the planet.
This struck me as a good story not because of military drama, but because of the accounting. Every closed loop has a point where money must come from somewhere. Here there turned out to be three such points, and all three stayed silent at different times.
Ukrainian drones attacked at least 25 Russian refineries starting in August 2025, and they didn't just hit primary distillation. According to Kpler, catalytic cracking units, hydrocracking, reforming, hydrotreating units took damage, along with tank farms and pipelines. It's the secondary processes that determine gasoline output, so repairing a primary column doesn't return a refinery to previous levels.
By mid-July the scale looked like this: idle or attacked capacity—around 4.3 million barrels per day, roughly 58% of the country's refining capacity. Oil refining fell to 3.8 million barrels per day—the lowest in more than two decades. Petroleum product exports slid from 2.3 million barrels per day in July 2025 to 1.2 million in July 2026, while crude oil exports actually grew: it's more profitable to sell unprocessed oil than wait for repairs.
One detail makes the whole picture clear. Kpler describes a persistent pattern: refineries get hit again before repairs can finish. Restoring individual units takes months, not weeks, and analyst forecasts for the fourth quarter remain pessimistic.
By late August, gasoline production in Russia was around 80 thousand tons per day against demand of roughly 115 thousand. The gap—35 thousand tons daily. The August average was slightly higher, around 90 thousand tons, and that's still only about 80% of summer demand. Refineries in Perm, Nizhny Novgorod, and Yaroslavl stood shut down.
Authorities first loosened, then reinstated restrictions: purchase limits per person and sales by license plate number schedule. Deputy Prime Minister Alexander Novak called the situation a "second stage of tension" and clarified that the problem was only with gasoline, while diesel and kerosene were adequate.
NEFT Research analytical center estimate: the deficit reaches 25–35%, and imports can't close it—incoming shipments equal one or two days of consumption. Gasoline exports are banned until January 31, 2027, and diesel exports for refineries were planned to resume from September 1.
Now for the Indian half of the loop. Nayara Energy's Vadinar refinery is India's second-largest private refinery, with processing capacity of 400 thousand barrels per day. It was purchased in 2015 from Essar in a deal coordinated at the heads-of-state level by Narendra Modi and Vladimir Putin: Indian state companies entered Rosneft, which acquired 49% of what would become Nayara.
Then the refinery fell under sanctions. From July 2025, the EU banned imports of petroleum products refined from Russian crude and restricted Nayara's access to European insurance, finance, and services. Oil suppliers—Saudi Aramco, Iraq's SOMO—left, and Vadinar switched to 100% Russian crude: 81% in 2025 and complete dependence in the first eight months of 2026. In parallel, according to CREA estimates, 94% of the refinery's exports over the 12 months to July 2026 were carried by sanctioned tankers—a year earlier there were zero.
In August, Russia bought 120 thousand tons of gasoline for roughly $89 million, in three shipments, with Rosneft as the buyer in all three cases. There were plenty of traders on paper too: Indian Oil Minister Hardeep Singh Puri stated that Indian companies don't sell fuel to Russia directly, but "possibly" Russia bought Indian-origin fuel through international intermediaries. In July, Reuters saw an invoice for the tanker Agni: the document listed Fujairah as the destination, but tracking data showed the vessel passed it and headed north through Suez.
The route assembled from Kpler and Bloomberg data looks like a carefully constructed bypass. The tanker Cyclone (formerly Agni) loads 42 thousand tons of gasoline at Vadinar on June 18. On July 6, the cargo is transferred ship-to-ship in Damietta, Egypt to the Oman-flagged Garnet. Garnet arrives in Russia in early August. A second tanker, Varg, takes 40 thousand tons, transshipment again at Damietta, and according to Kpler the receiving vessel may have been Beast, which declared Tangier.
Now for what turns the story from anecdote into economics. On August 5, the first tanker with Indian gasoline docked in Murmansk, and unloading didn't happen for several days. Simple reason: the fuel was offered at 130 thousand rubles per ton, then reduced to 110 thousand, while the exchange price for AI-92 in European Russia held around 73 thousand. For an oil company, buying meant selling at a loss.
On August 19, the first transaction went through on the St. Petersburg exchange: 360 tons at 105 thousand rubles per ton from Kola station. On August 20 and 21, another 660 tons sold at the same price, and exchange sales of imported gasoline stopped for nearly a month. InfoTEK explains this with two reasons: high price and persisting infrastructure limitations for receiving and loading at Murmansk port. The bulk of volumes went through direct contracts, bypassing the exchange—"distributed to gas stations, including VINKs, since prices turned out high and exchange sales would be either expensive or at large losses."
From August through incomplete September, the First Murmansk Terminal sent about 10 thousand tons to the domestic market, then over 20.4 thousand. By September at least seven tankers arrived in the port area, imported gasoline was brought in by three oil companies.
And here's the main contradiction of the whole story, which usually stays offscreen. Russia sells its oil at a discount and buys finished fuel in a market where crack spreads stand at historical maximums. The Trading Economics crack spread index in September reached $75 per barrel—almost double the level of mid-February. Urals meanwhile sold at $69.9 per barrel, noticeably above the $44.1 price cap that the EU and UK have maintained since February. Into this difference you still have to fit freight from western India to the Baltic or White Sea, expensive ship-to-ship transshipment off Egypt, and insurance for vessels that didn't exist in this trade a year ago. Each such shipment is a loss that no market mechanism compensates for.
Add to this that India made money on this same crisis in volume. Its petroleum product exports for April–August fell 16.3% in tons, but revenue rose 36.5%—from $15.9 to $21.7 billion, because it sold less but at higher prices. Diesel margin to Dubai crude reached $75–80 per barrel. At the same time India lost Europe: its share of European diesel and gasoil imports fell from 14% to 3%, and the main beneficiary of this collapse was U.S. refineries.
One detail remained, which in the end proved more interesting than all the logistics. The Indian gasoline shipped to Russia is Euro-3 standard. Sulfur content is higher than in familiar Russian fuel, and drivers started complaining: power loss, engine failures, fuel system errors, in themed forums—reports of cars stalling after refueling.
What happens next is something I didn't anticipate at the start of the investigation. It turned out that Russia authorized the lower fuel class for itself. From September 1, 2026 to July 1, 2027, retail sales are officially permitted for fuels of environmental classes K2, K3, and K4—equivalents of Euro-2, Euro-3, and Euro-4, previously banned in Russia. Gas stations in southern regions already display designations like AI-95-K2. In other words, a country that couldn't produce high-grade gasoline first allowed itself not to produce it, then received from abroad exactly the class it had authorized.
At the same time Kommersant presents an opposite fact that makes all this pity for Indian fuel look strange. India switched to the BS-VI standard, meaning Euro-6, six years ago, and since April 1 all gasoline in the country is sold with octane rating no lower than 95. The trouble is different: Indian fuel contains around 20% alcohol, while Russian technical regulations allow 1–5% ethanol in automotive gasoline. Here I must honestly say I don't know how this turned out in practice: formally the imported gasoline is low-class K3, but by composition it's a high-octane blend that doesn't meet Russian standards along a completely different line. Newspapers don't sort between these two facts at laboratories and fuel depots.
The Civic Chamber already discussed liability for damaged engines: the seller of bad fuel should pay for car repairs. Auto lawyer Sergei Radko objects matter-of-factly: if a car drove a hundred-two hundred kilometers after refueling, proving causation is nearly impossible, and in his practice there was only one case with a leaking underground tank where cars stopped right at the station. Insurers from RESO-Garantiya add that there's no statistics for pricing at all, so the product, if it appears, will be promotional.
The last turn worth taking away. While all the press counted tankers from India, the main foreign gasoline supplier to Russia remained Belarus: in August 188 thousand tons by rail and road, though only 26 thousand tons went through the exchange. The Belarusian gasoline share in Russian consumption grew from 2% to 6%, higher in some regions. Maritime deliveries in August totaled over 300 thousand tons, of which around 160 thousand tons went to Murmansk, the rest to Baltic ports. Plus Turkey, whose first shipment was caught by S&P Global data: the MR-class tanker Wendrix, 200 thousand barrels from Mersin, headed to a Baltic port; where the fuel on board came from—unknown. Indian, Turkish, and Moroccan tankers are the loud part of the story; the quiet part travels by truck across the border.
One more seam I won't smooth over. CREA writes that unloading took place at the Arctic port of Beloe More, Bloomberg and DW say the first shipment arrived in early August, and Russian regional outlets name Murmansk and Kola station as the receiving point. This could be two different terminals, could be the same story in different spellings; matching them from open data didn't work out. Exactly the same uncertainty with processing numbers: Kpler gives 3.8 million barrels per day for July, Kommersant citing Kpler gives 4.2 million, and the difference is apparently explained by different definitions and different data cutoff dates. I'm leaving both numbers as they are.
The bottom line. It was thought that drone strikes hit export revenue. By August it became clear that the main damage is in the internal balance, and Russia is closing it with money that doesn't exist in that balance. Sanctions logic is structured to punish the oil buyer: the law signed in Washington on September 18 authorizes tariffs up to 100% against countries purchasing Russian energy. India is exactly such a buyer. But the gasoline keeping the Russian vehicle fleet running is made at a refinery where India is simultaneously the seller and Russia is the co-owner. Punishing Indian exports means hitting the very pipeline through which Russia receives fuel it lacks.