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After falling to a nine-month low in February, India’s petroleum fuel exports–mainly diesel and aviation turbine fuel–to Europe surged to a multi-year high in March as the continent’s demand rose due to refinery disruptions in France and anticipation of lower production during the springtime refinery maintenance season.
India’s refined fuel exports to Europe shot up to an average of 385,547 barrels per day (bpd) in March from 169,196 bpd in February, and 276,068 bpd in January, as per data shared by energy cargo tracker Vortexa.
In the run-up to the European Union’s ban on Russian refined fuels from February 5, Indian refiners, particularly private sector players, rushed to cater to the region. The same was true for other fuel exporters like China and Saudi Arabia, as Russia was the EU’s largest fuel source, and a ban on fuel imports meant that the lion’s share of the supplies to the region would not be available anymore.
In February, however, fuel exports to the EU from India and other suppliers declined due to lower heating demand and high fuel inventory build-up in the region in the months leading up to the ban on Russian fuels. But in March, with most of the French refinery capacity going offline due to worker strikes over the controversial pension reform bill and the continent gearing up for the spring maintenance season, which will see various refineries in the region undergoing maintenance shutdowns, traders began ramping up fuel imports again.
Analysts believe that given the prevailing situation, the trend could continue going forward.
“The uptick in volume (of fuel exports from India) also aligns with stronger loadings from Saudi Arabia and the US to Europe. With the ongoing French refinery strike and upcoming refinery maintenance in the region, higher clean product (refined petroleum product) imports by the region is expected,” said Serena Huang, Vortexa’s head of APAC Analysis.
As per Vortexa data, public-sector refiners exported refined fuels to Europe in March after nil exports in January and February. Public sector refiners exported 55,636 bpd of refined fuels to Europe in March, accounting for 14.4 per cent of India’s total fuel exports.
Private sector refiners–Reliance Industries Ltd and Nayara Energy Ltd–-exported 329,911 bpd of fuels to Europe in March. Private-sector refiners are marginal players in India’s fuel retail market, which public-sector refiners predominantly control.
On the flip side, private refiners are major fuel exporters, while their public sector counterparts export only a fraction of their fuel output. Over the past months, robust fuel export volumes to Europe coincide with a ramp-up in the import of discounted Russian crude by Indian refiners.
From being a marginal supplier of crude oil to India before the war in Ukraine, Russia dethroned heavyweights like Iraq and Saudi Arabia to emerge as Delhi’s biggest source of crude.
The trend is significant on various counts. From the global oil markets perspective, suppliers like India are helping maintain a demand-supply balance while preventing extreme price shocks.
The EU wants to refrain from buying crude and refined fuels and products from Russia.
Countries like India, a major oil refiner, are playing their part in bridging the gap by buying Russian oil on the one hand and increasing the supply of refined products to the EU on the other. That is the primary reason why much of the West, which seemed annoyed at India’s rising purchases of Russian oil, appears to be largely comfortable with India’s increasing supply of fuels to Europe.
Under prevailing circumstances, India is increasingly prominent in the global crude oil and refined products supply map.
India is a major refiner with an annual refining capacity of about 250 million tonnes, or about 5 million bpd. While it is also one of the top consumer and importers of crude oil, India’s refining capacity is higher than its domestic demand, making it a net exporter of petroleum products.
