India’s exports of fuels, including petrol, diesel and Aviation Turbine Fuel (ATF), fell to their lowest level in nearly four years in May due to rising domestic demand. According to a report, the decline in exports was aimed at ensuring adequate domestic supplies amid the conflict in West Asia and ongoing refinery maintenance.
The report, citing data from Kpler Ltd, noted that outbound shipments of products including diesel, petrol and jet fuel averaged about 878,000 barrels a day last month, the lowest since October 2022 and down 31% from a year earlier.
The conflict, which has been ongoing for more than 90 days, has led to the near closure of the crucial Strait of Hormuz, disrupting the flow of crude oil and fuels to global customers, including India. India, which imports nearly 88% of its crude oil requirements, relies heavily on this route, accounting for around 40% of its crude oil imports, 50% of LNG imports and 90% of LPG imports.
The report noted that India’s export decline was also caused by a production shift towards higher liquefied petroleum gas (LPG) output at the expense of other fuels. LPG is a politically sensitive household fuel used by millions of consumers for cooking, and India imported about 90% of its requirements from the Middle East prior to the war.
“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 tonnes a day, Sujata Sharma, Joint Secretary in the Petroleum Ministry, said last week. This was 50% higher than a year ago.
India also imposed an export tax on petrol for the first time in four years, weighing on overall exports.
Meanwhile, state-owned oil marketing companies (OMCs) are currently incurring an under-recovery of around ₹650 on every domestic LPG cylinder sold and about ₹30 per litre on aviation turbine fuel (ATF), according to a senior Petroleum Ministry official.
According to Sujata Sharma, Joint Secretary in the Petroleum Ministry, “the under recovery on LPG cylinder is Rs 650 a cylinder on domestic LPG while there is an under-recovery of around Rs 30 per litre on domestic jet fuel but this under-recovery is variable based on international prices.”