India’s fuel exports plunge in May as domestic demand takes priority

Outbound shipments of products including diesel, gasoline and jet fuel averaged about 878,000 barrels a day last month, the lowest since October 2022 and down 31% from a year earlier, according data analytics firm Kpler Ltd.

Also Read: Higher petrol, diesel prices threaten to rekindle inflation pressures: Report

The conflict in the Middle East has led to the near-closure of the crucial Strait of Hormuz, choking off flows of crude and fuels to global customers, including India. Nations across Asia scrambled to ensure domestic requirements wouldn’t be significantly disrupted by the war by curbing some of their exports.

Bloomberg

India’s oil products’ exports are lowest in nearly four years

Part of India’s export decline has been caused by a production switch to higher liquefied petroleum gas in place of other fuels. LPG is a politically sensitive household fuel used by millions of consumers for cooking, and the Asian nation imported about 90% of its needs from the Middle East prior to the war.

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“This shift reduced the availability of export barrels, with gasoline and gasoil exports seeing the largest impact,” said Sumit Ritolia, modeling and refining manager at Kpler.

India’s refiners increased LPG production last month to a record 52,000 tons a day, Sujata Sharma, joint secretary at the oil ministry, said last week. That is 50% higher than a year ago. New Delhi also imposed an export tax on gasoline for the first time in four years, weighing on overall exports.Also Read: Fuel duty cuts can power export hike

Reliance Industries Ltd., India’s biggest fuel exporter, diverted some fuels it would typically ship overseas to the domestic market after shutting a unit at its refinery on the country’s west coast in mid-May. The massive facility is primarily geared toward serving the local market.

Early measures by Asian nations such as South Korea, China and Thailand to curb exports have led to stockpiles swelling, prompting governments to allow the resumption of some overseas sales. That has helped to ease some of the demand for Indian products.