Exports of petroleum products from India in July may reach their highest level since September. Refineries are increasing supplies amid high processing profitability and a global fuel shortage caused by reduced Russian exports and escalating tensions in the Middle East.
India, the fourth largest refining hub in the world, is expected to export about 1.4 million barrels of petroleum products per day in July. This represents an increase of approximately 20% compared to a year ago and nearly 50% higher than in May, according to data from Kpler, which tracks maritime shipments.
The escalation of hostilities in the Middle East could further reduce global fuel supplies, which have already declined following Ukrainian drone attacks on Russia’s energy infrastructure that prompted Moscow to impose a ban on petroleum product exports.
Indian refineries are seeking to capitalize on the global fuel shortage, which has driven diesel and jet fuel prices to multi-year highs. Meanwhile, their competitors in the Middle East, traditionally large exporters of these fuels, are facing disruptions due to ongoing hostilities.
The country’s two largest refineries, owned by Nayara Energy Ltd. and Reliance Industries Ltd., have resumed operations after scheduled maintenance, coinciding with seasonally weak domestic demand for diesel due to monsoon rains.
“High profitability of diesel, jet fuel, and gasoline production continues to incentivize refiners to operate at maximum capacity,” said Sumit Ritolia, lead analyst for supply and refining modeling at Kpler. He noted that the reduction in Russian petroleum product exports has further constrained global fuel supply while enhancing refining economics.
Threats to oil supplies
However, new risks to crude oil supplies could jeopardize this favorable period for exporters. U.S. President Donald Trump announced the resumption of the blockade of Iranian ships passing through the Strait of Hormuz and declared his intention to impose a 20% tariff on all goods transported through this sea route.
India traditionally receives nearly 40% of its crude oil from the Persian Gulf region, so the government may require refineries to reduce exports if supply disruptions persist.
For now, supplies of Russian oil allow Indian refineries to operate at nearly full capacity despite the unstable situation in the Middle East. According to Kpler, the country imported about 2.6 million barrels of Russian oil per day this month, accounting for more than half of its total imports.
Additionally, this month India reduced export taxes following an increase in domestic stocks. According to Oil Minister Hardeep Singh Puri, the country currently has reserves of crude oil and petroleum products that will last approximately 75-80 days.
Source: Bloomberg
