India has hiked the export duties it will be charging on exports of diesel and jet fuel for the two weeks starting July 16, as the return of the Hormuz crisis is set to further tighten fuel markets.
The export taxes on diesel and aviation fuel were nearly doubled per liter of the fuels, a notice from India’s Finance Ministry showed on Thursday.
India reviews its export duty policy every fortnight to account for the prevailing domestic and international market conditions, including supply and prices.
In the latest review for the period July 16 to July 31, India will have a levy on diesel exports at 15.50 rupees ($0.16) per liter, up from 8.5 rupees. The jet fuel export taxes were also hiked to 14.5 rupees a liter from 7.5 rupees in the first half of July.
India, however, lowered the export duty on gasoline sales overseas to 2.5 rupees a liter, from 4 rupees.
Despite nearly doubled duties on diesel and jet fuel exports, the levies remain a fraction of the heights from the early weeks of the Iran war, when export taxes were three to four times higher than today’s amid spiking crude oil prices and a collective Asian scramble for crude oil supply not needing the Strait of Hormuz to reach buyers.
Analysts expect that the hiked export duties could curb some of high Indian fuel exports, which is not good news for the global fuel market that is already exceptionally tight on diesel stocks, amid a Russian ban on exports after Ukraine crippled Russia’s refining capacity in a months-long campaign of drone attacks.
“The real stress in energy markets is not in crude oil but in refined products,” Ole Hansen, Head of Commodity Strategy at Saxo Bank, said earlier this week.
“While Brent has rallied back above USD 80, diesel, gasoil and jet fuel continue to command exceptionally strong premiums as low inventories, refinery disruptions and peak seasonal demand tighten product availability.”
By Tsvetana Paraskova for Oilprice.com
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