Tightening Asian fuel markets and Indian refiners’ thirst for Russian crude have resulted in the highest Indian diesel exports to Southeast Asia in seven and a half years in March, Reuters reported on Tuesday, citing trade sources and data from analytics firm Kpler.
As the Middle East war roils Asian fuel markets and prompted many countries in Asia, including China, to impose fuel export bans, Indian refiners are taking advantage of the higher premiums they get to send their fuel to Southeast Asia, which began struggling with fuel shortages.
India is estimated to have sent 7.45 million barrels of diesel to Southeast Asia this month, with half of these volumes going to Singapore, according to the data collected by Reuters.
The overwhelming majority of the diesel supplies from India came from the biggest private refiner, Reliance Industries, per the data from Kpler.
India’s diesel cargoes could ease the supply tightness in the Southeast Asian markets.
The Philippines, for example, last week declared a national energy emergency, the first country in the world to do so, after gasoline and diesel prices doubled since the war began. The Philippines depends on imports from the Middle East for 98% of its oil needs.
Vietnam, for its part, temporarily removed the value-added tax on gasoline, diesel, and jet fuel until April 15, while local airlines will slash routes as of April 1 amid a major aviation fuel crunch.
Indian diesel exports bring higher profits to Indian refiners despite the recently imposed levy on fuel exports, analysts say.
The crude supply crunch from the Middle East has forced refiners across Asia to reduce processing rates or extend maintenance, while countries including China have banned all fuel exports to preserve domestic supply.
But Indian refiners haven’t cut crude throughput as they are snapping up now-unsanctioned Russian oil to process into fuels.
The tight Asian markets and the price spreads between east and west of Suez in favor of shipping fuel to the east are likely to keep Indian diesel exports elevated in the coming weeks, according to analysts and traders.
By Charles Kennedy for Oilprice.com
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