India refiners reap fuel export windfall as war drives shortages

Oil-product shipments from India are on track to climb to their highest level since September as refiners cash in on robust profit margins after a Russian export ban and hostilities in the Middle East tightened supplies.

The world’s fourth-largest refining hub is set to export about 1.4 million barrels a day of petroleum products in July, about a fifth higher than a year earlier and nearly 50% more than the volume shipped in May, according to Kpler vessel-tracking estimates.

The upsurge in attacks in the Middle East looks set to tighten global fuel supplies, which have already been squeezed after Ukrainian drone attacks on Russia’s energy infrastructure prompted Moscow to ban exports.


Processors in India have rushed to capitalize on the tight markets that have pushed global prices for fuels to multi-year highs while competitors from the Middle East, traditionally major exporters of diesel and jet fuel, were hamstrung by the war. Two of the country’s largest refineries, run by Nayara Energy Ltd. and Reliance Industries Ltd., restarted after planned maintenance while domestic diesel demand was seasonally weak due to the monsoon rains.

Strong profit margins for diesel, jet fuel and gasoline continue to encourage refiners to maximize throughput, said Sumit Ritolia, lead analyst for refining supply and modeling at Kpler, adding that lower Russian product exports have tightened global fuel balances while strengthening refining economics.

However, emerging threats to oil flows may upend the profitable trade. President Donald Trump reimposed a blockade on Iranian ships transiting the Strait of Hormuz and has said the US will impose a 20% toll on all goods passing through the waterway. India typically gets almost 40% of its crude from the Persian Gulf region and the government may force the refiners to limit exports if crude supply disruptions persist.

So far, Russian oil supplies have helped processors in the South Asian nation to operate their plants at full capacity despite the Middle East disruptions. India has imported 2.6 million barrels a day of Russian oil to date this month, or more than half of its total requirement, Kpler data showed.

India also cut export taxes this month as local stockpiles swelled. The country has crude oil and petroleum products inventories for 75-80 days, Oil Minister Hardeep Singh Puri said last week.