The Daily Populous Monday August 25th, 2025 night edition
Authored by thehindubusinessline.com and submitted by theagentK1

American officials blowing hot and cold on India, ostensibly for buying Russian oil, need to only look at what an official of a previous administration said — ‘If something cannot go on for ever, it will stop’.

Known as the Stein’s Law, it was coined by Herbert Stein who was the Chairman of Council of Economic Advisors under Richard Nixon. The law is popular among economists and stresses on the how market forces will enforce discipline to unsustainable trends — economic or otherwise.

This narrative on India profiteering by purchasing ‘cheap’ Russian oil and selling its derivatives is one such unsustainable trend. Whether it is White House Trade Advisor Peter Navarro, or US Treasury Secretary Scott Bessent, they would like you to believe that Indian companies are making unacceptable profits through this ‘arbitrage’.

But scratching the surface a weeny bit, it becomes clear that this charge is baseless. In fact, hard numbers reveal that it is the US oil and gas companies that have profiteered from the Russia-Ukraine war.

Whether it is the refining margins or net profit, it is clear that no significant profit has accrued to Indian companies. From under 2 per cent of India’s oil imports in 2021, purchases from Russia in 2024 were at around 33 per cent. But check the Gross Refining Margin per barrel for Indian refiners in this period (FY22 to FY25), they have actually fallen. Had there been any profiteering, shouldn’t the GRM have moved up? GRMs for all Indian companies today (FY25) are below their levels at the time the Russia-Ukraine conflict started (FY22).

Data over the period of the conflict indicate that nearly all refiners gained from a spike in refining margins when the conflict started (CY22 for global players, FY23 ending March for Indian companies). While the margins doubled for refiners like BPCL in India and Marathon Petroleum in the US, it was even more for some. European major Shell benefited with more than a tripling of its refining margins per barrel from $4.79 in CY21 to $18.03 in CY22. Even more in the case of Total Energies. US refiner Phillips 66, too, gained with a near tripling of its refining margins.

Last week, Scott Bessent targeted Indian companies, apparently including Reliance Industries for making $16 billion in excess profits. But the actual numbers show that changes in the global oil industry dynamics due to the war have actually benefited European and US companies. This can also be gauged from their profits in CY22/FY23. The O2C segment of Reliance Industries, which houses its refining business reported profit before tax (PAT data unavailable) of ₹53,883 crore in FY23 or a little over $6 billion. This was up 20 per cent over FY22.

To the contrary, US refiners like Valero Energy reported a 900 per cent increase in net profits to $11.5 billion in CY22 while Marathon Petroleum reported a 800 per cent spike to $13.6 billion. Exxon Mobil benefited the most from the Russia-Ukraine war with profits increasing a staggering $36 billion in CY22 to $59 billion.

Meanwhile, Indian refiners such as IOCL, BPCL and HPCL reported decline in profits or losses due to under-recoveries. When the recent financial year data is also compared with the pre-war numbers, the US and European players’ refining margins and profits are better. For Indian companies, both are actually worse or flattish, despite all the increase in imports of Russian crude oil. Reliance Industries does not report GRM, but its recent filings indicate that the crack spreads (price difference between crude oil and refined products) are below five-year averages. So, the $16-billion question one may want to ask Scott Bessent is: Where is the arbitrage? And the note to Peter Navarro is ‘Russian oil is no blood diamond’.

Terrible-Group-9602 on August 24th, 2025 at 10:12 UTC »

is the website an independent source?

theagentK1 on August 24th, 2025 at 10:08 UTC »

Summary of the News Article that debunks the false narrative being spread around the world about India's profiteering from the buying of Russia's oil:

— The “India is profiteering via arbitrage” claim collapses under Stein’s Law: unsustainable narratives get corrected by market forces.

— India did shift crude sourcing (from <2% Russian share pre-war to 33% in 2024), but if this created windfall profits Indian Oil Companies would see higher refining margins and profits — but that doesn't show!

— Indian refiners’ Gross Revenue Margins fell vs FY22, and Indian state OMCs even absorbed losses/under-recoveries when pump prices were capped — hardly a profiteering setup.

— The giant windfalls of 2022 were global and especially pronounced in the US/EU as crack spreads spiked; it wasn’t unique to India as shown in the images in the article.

— Reliance O2C PBT was $6B in FY23, up ~20%—not the “$16B excess” being thrown around; recent filings say crack spreads are below 5-yr averages.

— Buying discounted crude during a supply shock ≠ is illicit profiteering, and the data quoted in the article don’t show sustained windfalls in India.

— Indian Oil Companies GRMs FY25 < FY22: 1. IOC 11.25 → 4.80 (−57%), 2. BPCL 9.09 → 6.82 (−25%), 3. HPCL 7.19 → 5.74 (−20%), 4. CPCL 8.85 → 4.22 (−52%).

— US/EU Oil Companies GRMs FY25 > FY22: 1. Shell 4.79 → 7.40 (+54%), 2. Total 1.44 → 5.38 (+274%), 3. BP 13.2 → 17.7 (+34%), 4. Valero 9.04 → 10.65 (+18%), 5. Marathon 13.36 → 16.06 (+20%), 6. Phillips 66 7.42 → 8.84 (+19%).

— Profit spikes centered in the US (FY23 vs FY22): Valero ~+906%, Marathon ~+800%. Indian OMCs show losses/low growth over the same period; it shows the big windfalls were in the US, with Europe modest and India largely down or flat.

'Gross Refining Margins of Oil Companies of India vs Europe vs the USA' Images in the news articles