NEW DELHI: Indian refiners, mostly private sector, exported roughly 2.50 million tonnes (mt) of diesel, the highest in a year, in September as refinery attacks and geopolitical tensions impacted roughly 10 per cent of the global refining capacity with transportation bottlenecks further exacerbating the situation.
Analysts, traders and refiners indicated that West Asia refinery outages and drone attacks on Russian refineries impacted roughly 8 million barrels per day (mb/d) of global refining capacity. What has further tightened the market for diesel is curtailed Chinese refining and shipping constraints.
“Acute diesel shortage, particularly in Europe, offered a window of opportunity to domestic refiners. Mostly private refiners such as Reliance Industries (RIL) got a good market opportunity. Shortage is expected to continue and will keep crack prices on the higher side,” said one of the sources.
Kpler said that Indian refiners have been able to maintain strong domestic supplies while capitalising on shortages in international markets.
“Diesel exports have been particularly strong, with shipments reaching around 620,000 barrels per day (b/d) in September, the highest in a year. Indian products are reaching Europe, Africa, Asia and even distant markets such as the US West Coast, while some diesel cargoes have also moved to Russia in recent months,” it added.
This reflects India’s growing role as a reliable supplier to global product markets, particularly when traditional exporting regions are struggling with refinery outages and logistical disruptions, noted Sumit Ritolia, Kpler’s Lead Research Analyst for Refining & Modeling, said.
“One important distinction worth preserving is that India’s export-oriented refiners have benefited significantly from high diesel cracks, but that does not mean all Indian refiners or fuel marketers are enjoying similarly strong net margins, especially where domestic selling prices remain constrained,” he told businessline.
Trade sources said that RIL is a main gainer here considering it is a major swing supplier of ultra low sulphur diesel.
RIL’s dual-refinery set up addressing domestic and international markets offers the refiner logistical and operational edge to manage output yields, adjust crude processing and act as a fast swing supplier. It has also been a major supplier of winter grade diesel to Europe.
The combination of relatively competitive crude procurement, high refinery utilisation, processing flexibility and strong international product prices has translated into exceptionally healthy refining economics, particularly for export-oriented refiners, Ritolia said.
Diesel cracks have been especially attractive, with Singapore diesel cracks against Dubai exceeding $60 per barrel during September. However, the benefits are not uniform across the sector, as refiners with greater export flexibility are better positioned to capture international margins than those primarily serving the domestic market, he added.
The Federal Bank of Dallas (Dallas Fed) in a Thursday commentary said that global refinery capacity declined by as much as 10 per cent due to closure of the Strait of Hormuz, attacks from Houthi rebels in Yemen on Red Sea shipping, damaged Middle East refineries, Ukrainian drone attacks on Russian refineries, and export restrictions in China and Russia.
Additionally, a decade of minimal refinery investment has intensified fuel market pressures. Between 2019 and 2025, global liquid fuel consumption grew 4 mb/d, while refining capacity increased 2.3 mb/d, it added.
Taken together, refining capacity curtailment and depleted inventories are driving a blowout in fuel prices. Global economy is wrestling with a refining shock in addition to an oil price shock, particularly for diesel. The diesel situation is even worse in Europe, where reduction of Russian and West Asia fuel exports has been more impactful, it emphasised.
“Looking ahead, I expect diesel cracks to remain structurally supported, although some correction from the exceptionally elevated levels is possible. Middle Eastern refinery runs remain well below pre-war levels, Russian downstream supply continues to face disruptions, and global product inventories remain tight,” Ritolia anticipated.
Even if crude flows normalise relatively quickly, restoring refinery operations and refined product exports will take considerably longer. Strategic stock releases could provide some short-term relief, but they do not resolve the underlying supply constraints, he added.
Source: The Hindu Business Line
