• Source:JND

India's exports of refined petroleum products fell to about 930,000 barrels per day (bpd) in May, their lowest level since October 2022. The reason for the decline is not the fuel price hike in the domestic retail market due to highly elevated crude prices, amid the closure of the Strait of Hormuz, due to the ongoing tussle in the Middle East.

The dip in petroleum projects is caused by refinery maintenance, changing production priorities to LPG, and stronger domestic demand.

According to data analytics firm 'Kpler', the decline was primarily due to planned maintenance at Reliance Industries' Jamnagar refining complex, India's largest refinery and a major exporter of refined fuels.

The maintenance program reduced crude oil processing rates and limited the availability of export volumes during the month.

LPG Production Increases

According to the report, Refineries also adjusted product output to increase liquefied petroleum gas (LPG) production for the domestic market, reducing petrol and diesel production by approximately 80,000 bpd.

This change reflects efforts to meet local LPG supply needs and comes at the expense of export-oriented products, particularly gasoline and diesel.

Amid the need to secure energy and maintain adequate local fuel supplies, state-owned refineries further contributed to the decline by diverting a larger portion of production to the domestic market. This move reflects a larger trend of prioritising domestic demand over export markets.

Exports Decline

Exports fell to around 930,000 bpd in May, below the level of October 2022, when shipments averaged 926,000 bpd. This reflects a reduction in refinery throughput and an increased focus on supplying the domestic market.

"This sharp cutback was driven by a combination of lower refinery throughput, maintenance activity, and a structural pivot toward the domestic market," said Sumit Ritolia, model and refining manager at Kpler.

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According to Ritolia, export economics have also become less profitable as the taxes on exports of refined products are reducing the attractiveness of overseas sales compared to domestic supply, reducing the incentive for refiners to increase overseas shipments.

"The sharp fall in exports underscores how refinery maintenance, evolving fuel demand patterns and policy considerations are reshaping India's refined product trade flows, even as the country remains one of Asia's largest fuel exporters," he said.

(With Inputs From PTI)


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