India likely exported the highest-ever monthly volume of diesel to Europe in September, as higher premiums and curbed capacity due to maintenance in Europe incentivized Indian refiners to ship more fuel to the west, Reuters reported on Thursday, citing vessel-tracking data and trade sources.
India is estimated to have exported 9.7 million to 10.4 million barrels of diesel to Europe last month—the highest ever in records dating back to 2017, according to trade sources and ship-tracking data from Kpler and LSEG.
The widening east-west diesel spread incentivized shipments from India to Europe, while shipping costs have dropped since the end of August to further provide more profit incentive for Indian refiners to direct their shipments to Europe.
On the other hand, seasonal maintenance at some European refining capacity has curtailed Europe’s domestically produced diesel and other fuels.
In this context, India has stepped up to supply more diesel to Europe.
Following the likely surge to record-highs in September, Indian diesel exports, to Europe and elsewhere, could decline in October as demand in India is set to jump seasonally with the Diwali festival later this month. Diesel is the most widely used fuel in India, ahead of gasoline.
Even with the expected strong demand during the festive season, Indian refiners could be tempted to keep exports elevated, due to the high refining margins supporting overseas sales, Ivan Mathews, head of APAC analysis at Vortexa, told Reuters.
Further down the road, it’s uncertain how much diesel and other fuels India will be able to export to Europe, considering the EU’s 18th sanctions package against Russia.
In this package, adopted in the middle of July, the EU said it is introducing an import ban on refined petroleum products made from Russian crude oil and coming from any third country – with the exception of Canada, Norway, Switzerland, the United Kingdom and the United States. The goal of this measure is to prevent Russia’s crude oil “from reaching the EU market through the back door,” the EU says.
Russia accounts for about a third of all of India’s crude oil imports, so the world’s third-largest crude importer will be hit by the EU move, with the effect on fuel flows uncertain.
By Michael Kern for Oilprice.com
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