India fuel exports near 10-month high as war-driven shortages lift margins

India's oil-product shipments are on track to rise to their highest level since September, as refiners take advantage of strong margins after a Russian export ban and fighting in the West Asia tightened supplies. Kpler vessel-tracking estimates show the world's fourth-largest refining hub is set to export about 1.4 million barrels a day of petroleum products in July.

That would be about a fifth higher than a year earlier and nearly 50% more than the volume shipped in May. The rise comes as global fuel supplies have been squeezed by Ukrainian drone attacks on Russia's energy infrastructure, which prompted Moscow to ban exports, and by an increase in attacks in West Asia.

Indian processors have moved quickly to benefit from the tighter market, which has pushed global prices for fuels to multi-year highs, while competitors in West Asia, traditionally major exporters of diesel and jet fuel, have been constrained 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 remained seasonally weak because of the monsoon rains.

A Bloomberg report, citing Kpler, said strong margins for diesel, jet fuel and petrol continue to encourage refiners to maximise throughput, while lower Russian product exports have tightened global fuel balances and improved refining economics.

However, fresh threats to oil flows could disrupt the trade. President Donald Trump has reimposed a blockade on Iranian ships transiting the Strait of Hormuz and 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 require refiners to limit exports if crude supply disruptions continue.

Russian crude has meanwhile helped Indian refiners maintain high operating rates despite the disruption. Data showed India imported 2.6 million bpd of Russian crude so far this month, accounting for more than half of its total imports. Lower export taxes and domestic inventories sufficient for 75–80 days have further supported shipments, although any disruption to crude flows through the Strait of Hormuz could quickly alter the outlook.