Demand for Indian petro-goods may be about to surge

Ukraine has rained missiles and drones on Russian energy assets to disrupt Moscow’s war funding, hurting about 30% of its refining capacity, and prompting buyers to turn to refiners in India. Meanwhile, colder weather in Europe is expected to increase energy demand for heating.

September witnessed India’s highest export of petroleum products so far in fiscal year 2026 (FY26) at 6.18 million tonne, data from Petroleum Planning & Analysis Cell showed. Diesel exports to Europe hit a 19-month high of 291,000 barrels per day in September according to global real-time data and analytics provider Kpler, the highest since December 2023, and this robust demand is expected to continue in months ahead.

“These (Russian) refineries would require a few months to completely revive operations, which would mean demand via imports may sustain. Export demand till the next quarter seems strong,” said Prashant Vasisht, senior vice-president and co-group head of corporate ratings at Icra Ltd. Demand from Russia is also expected to go up, he said.

Reliance, Nayara

Private entities like Reliance Industries Ltd and Russian-owned Nayara Energy are the major exporters of petroleum products in India. Reliance operates the world’s biggest refining complex at Gujarat’s Jamnagar. Queries mailed to both companies remained unanswered till press time. Public sector refiners export relatively minor quanties of refined products.

India’s exports of refined products in the April-September period were 31.9 million tonne valued at $19.89 billion, marginally higher than 31.7 million tonne of products worth $25.5 billion exported a year earlier, showed data from Petroleum Planning & Analysis Cell. In FY25, India exported products worth $44.4 billion. India largely exports aviation turbine fuel, diesel to the Europe Union and Southeast Asian countries.

“Product export demand from India will likely remain robust going ahead, supported by strong refinery runs, lighter maintenance schedules compared to last year, and refining margins that continue to support higher utilization rates. However, curtailed refinery activity at Nayara and unplanned outages at the Mumbai (HPCL) refinery will keep incremental supply in check, with some barrels diverted to the domestic market. Most maintenance in Europe is expected to conclude by mid-November, after which refineries are likely to ramp up quickly,” Sumit Ritolia, lead research analyst, refining and modelling at Kpler.

Russia is currently India’s largest source of crude oil, but Moscow imports little refined products from India. Exports to Russia stood at a mere $11 million in FY25 and about $3 million during the April-July period, Union commerce ministry data showed. However, since September, enquiries from Russia have risen, a trader said on the condition of anonymity.

New horizons

Indian refiners have increased shipments to Brazil, Turkey and African countries, markets which have not been major buyers of Indian petro-products. Further, most refineries have completed the scheduled annual maintenance and would be operating at maximum potential going ahead.

Top importers of Indian petro-products are the Netherlands, United Arab Emirates, the US, Singapore and Australia, as of July FY25, as per the ministry’s data with imports worth $4.3 billion, $1.97 billion, $1.79 billion, $1.57 billion and $1.16 billion from India.

Experts also suggested that European buyers would look to stock up before 21 January, 2026 when the European Union’s 18th package of sanctions takes effect. The sanctions would enforce a ban on any refined petroleum product processed from Russian crude oil in any third country.

According to Kpler’s Ritolia, it remains to be seen how the European demand evolves. “European buyers may import in strong volumes ahead of the EU’s 18th sanctions package, which is set to take effect in January 2026. With sanctions already imposed on Nayara Energy and the upcoming EU 18th sanctions package, Indian refiners are increasingly diversifying their export destinations. There has been a noticeable rise in flows to Latin America (particularly Brazil), Turkey, and African markets, as Indian products find alternative homes amid tightening European regulations and shifting trade alignments,” Ritolia said.

Refining ops

Ritolia added that the sanctions may, however, slightly impact India’s refining operations, as incremental runs previously supported by access to cheaper barrels are expected to be curtailed, though the overall impact is not expected to be significant. Incremental run refers to the increase or enhancement refinery operations and output as per the prevalent market scenario.

The coming surge of export demand comes in the wake of Indian refiners looking at diversifying export destinations amid sanctions on products produced from Russian oil. Deepak Mahurkar, partner for oil and gas at PwC India, said sanctions on Russian oil suppliers would not impact the export potential of Indian refiners, given that India’s crude oil import base has significantly expanded in the past few years, and crude procurement strategies of the private refiners are also robust.

“There is no dearth of oil globally. Availability would not be an issue. Indian refiners, which largely supply diesel to Europe and gasoline to the US would be adequately prepared to diversify sourcing of crude and cater to the global demand. Further, petroleum products are no under tariffs, so no obstructions are seen in terms of supplies from India,” said Mahurkar.

Kpler data showed that in October, UAE was the largest buyer of Indian petro-products at around 152,000 barrels per day, followed by the Netherlands at 132,000 bpd. Tanzania was in third place with 123,000 bpd, much higher than 54,000 and 57,000 bpd imported in August and September respectively. Brazil, which has not been a regular buyer from India, imported 28,000 bpd in October, but in September it had imported 131,000 bpd becoming a significant buyer of Indian petroleum products.

Turkey has imported 16,000 bpd this month from Indian refiners, while in September, it had imported 54,000 bpd, the highest in about two years.