India’s diesel exports during November this year rose to a 17-month high at 2.83 million tonnes (mt) on account of lower domestic consumption coupled with higher refinery runs, sparing a larger capacity to sell to customers in Europe and the US.

However, the rally is likely to subside in the current month as domestic consumption will pick up, aided by rising construction activity, Rabi crop sowing, and year-end tourism.

According to the Petroleum Planning and Analysis Cell (PPAC), high-speed diesel (HSD) exports in November 2023 rose by 34 per cent m-o-m and 43 per cent on an annual basis.

The outbound cargoes of diesel during November 2023 were the highest in the last 17 months till June 2022, when India exported 2.46 mt of the critical auto fuel, which is also used for heating (gas oil). In May 2022, diesel exports stood at 3.06 mt.

The development largely benefits private refiners, Reliance Industries (RIL) and Rosneft-backed Nayara Energy, who are the major exporters of diesel to Europe and the US.

Seasonal variations

An official with an oil marketing company (OMC) explained that during the monsoon, mobility, construction, and mining activity declined, which also reflected lower consumption of diesel. Also, refinery runs during this period focus on export earnings, which is seen in higher diesel exports.

October–December is a key consumption quarter due to rising industrial, mining, and farm activities. Festival and marriage seasons also add to the growing demand. OMCs then start stocking from September onward to meet domestic demand.

September and October 2023 witnessed refinery maintenance, which reflected lower processing of crude oil. This also reflects lower import volumes of crude oil and lower production of diesel.

The balance from previous months and higher diesel production in November, at 9.96 mt, coupled with lower consumption during the month spared a larger capacity for exports.

This time, consumption in October 2023 was higher historically, also due to the early harvesting of kharif crops. Besides, most of the stocking for FMCG and FMCD happened in October, as Diwali was in November.

Gasoline, petrol, and jet fuel consumption was higher in November as mobility during the month increased due to Diwali and marriage season.

Decline in December

“The export could be a one-time phenomenon. Diesel consumption will inch up as farm activity for Rabi crop sowing picks up. Besides, construction and industrial activity also look promising. Also, the marriage season will start again next month,” the official projected.

On India’s refined petroleum products exports, OPEC, in its monthly oil market report for December 2023, said, “Tanker tracking data shows a jump in product outflows to major trading hubs in November, with gains across all major products. Product exports are likely to fall in December as domestic demand picks up.”

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