Kamal Ghorui
US-Iran war impact: India’s diesel exports have climbed by 20% in March amid the ongoing Middle East conflict. The widening gap between crude oil prices and refined diesel prices have led India to ramp up diesel exports by about 20% month-on-month in March, even as total shipments of refined products declined by 8%, according to shipping data.Refiners typically alter their output mix to take advantage of favourable crack spreads and margins. The crack spread refers to the price difference between crude oil and the refined products derived from it, while margins represent the profits refiners earn after accounting for costs and operational efficiency.Although crude prices have surged amid the near shutdown of the Strait of Hormuz, the effect has differed across fuels. Crack spreads for diesel and jet fuel have climbed to new highs, whereas those for petrol have remained broadly stable.
Diesel Exports Rise Amid Middle East Conflict
Data from vessel tracking firm Kpler showed that diesel exports reached 12.90 million barrels between March 1 and 28, compared with 10.74 million barrels in February.“Higher diesel export volumes are likely supported by improved economics for middle distillate production. Geopolitical tensions in West Asia have tightened middle distillate balances, with diesel and jet fuel cracks strengthening more than gasoline (petrol),” Nikhil Dubey, senior research analyst at Kpler told ET.Also Read | LPG crisis eases: Operations back to normal in many factories as commercial LPG supplies improve; workers return“Geopolitical tensions in West Asia have tightened middle distillate balances, with diesel and jet fuel cracks strengthening more than gasoline (petrol),” Dubey added.Refiners continue to recalibrate their product slate to capitalize on these stronger spreads and profitability dynamics.Despite a sharp rise in crude oil prices triggered by the near shutdown of the Strait of Hormuz, the effect has not been uniform across refined fuels. Margins, measured through crack spreads, have surged to fresh highs for diesel and jet fuel, while those for petrol have largely remained within normal ranges.India’s petrol shipments dropped significantly in March, declining 33% to 8.31 million barrels. According to Dubey, the fall in gasoline exports is also linked to a strategic shift toward higher LPG output, with refiners diverting certain hydrocarbon streams away from petrol production and instead processing them into liquefied petroleum gas.Domestic LPG production has been ramped up sharply, rising 40% since the onset of the US-Israel conflict with Iran. This increase is aimed at offsetting supply disruptions from the Gulf region, which previously accounted for about 54% of India’s LPG consumption.In contrast, exports of jet fuel slipped 4% to 2.63 million barrels in March, even as global margins for the fuel reached record levels. However, this figure may be revised upward once complete shipping data is available, as exports classified under the broader ‘clean products’ category climbed 40% to 1.11 million barrels. This category includes jet fuel, naphtha, petrol and diesel, and is used when cargo details are not immediately specified.Also Read | US-Iran war impact: India’s crude imports from Russia near all time highs; will such high numbers continue?To ensure sufficient domestic availability, India has imposed export levies of Rs 21.5 per litre on diesel and Rs 29.5 per litre on jet fuel, discouraging outbound shipments by private refiners. Among exporters, Reliance Industries accounted for nearly 75% of the country’s total refined fuel exports during the month.Meanwhile, outbound shipments of fuel oil, commonly used in industrial operations and shipping, rose 27% to 1.71 million barrels as demand improved and margins strengthened. On the other hand, naphtha exports fell sharply by 44% to 2.93 million barrels.Overall, India’s total exports of refined petroleum products declined to 31 million barrels in March, down from 33.67 million barrels recorded in February.
