India’s fuel exports dropped sharply in May, reaching their lowest level in nearly four years as refiners focused on ensuring domestic fuel supplies amid disruptions caused by the Iran war and refinery maintenance activities.
According to a report by Bloomberg, exports of diesel, petrol and jet fuel averaged about 878,000 barrels per day in May. This was a decline of 31 percent compared to the same month last year and marked the lowest export level since October 2022. The report cited data from Kpler.
The decline comes as the conflict in the Middle East disrupted global energy trade. The near-closure of the Strait of Hormuz, a key shipping route for crude oil and fuel, raised concerns about fuel availability across Asia.
Several Asian countries moved quickly to secure domestic fuel supplies by reducing exports. India also shifted its focus toward meeting local demand, especially for essential fuels.
Higher LPG Production Reduces Export Availability
A major reason behind the export decline was the increased production of liquefied petroleum gas (LPG), which is widely used by Indian households for cooking.
Before the conflict, India imported nearly 90 percent of its LPG requirements from the Middle East. To reduce dependence on imports and ensure adequate supplies, Indian refiners increased LPG production significantly.
Oil Ministry Joint Secretary Sujata Sharma recently said LPG production reached a record 52,000 tonnes per day in May, up 50 percent from a year earlier.
According to Kpler, this shift toward LPG production reduced the availability of gasoline and diesel for export markets.
Policy Measures And Refinery Shutdown Add Pressure
The government also imposed an export tax on gasoline for the first time in four years, further discouraging overseas shipments.
Meanwhile, Reliance Industries, India's largest fuel exporter, diverted part of its fuel output to the domestic market after shutting a processing unit at its west coast refinery in mid-May. The refinery mainly serves Indian consumers.
Earlier export curbs by countries such as South Korea, China and Thailand led to rising fuel inventories. As stockpiles increased, some governments allowed exports to resume, easing pressure on global fuel markets and reducing demand for Indian fuel exports.
