India’s exports of diesel and petrol rose on a monthly basis in May this year amid higher refinery runs and growing inventories with more diesel cargoes heading to Asia amidst a saturated European market.

Analysts and trade sources said that higher inventories coupled with more refinery runs and a slight drop in consumption of petroleum products spared more cargoes for export. Indian refiners also turned to Asia amidst a saturated European market for diesel cargoes.

However, the situation could turn during the remaining Summer travel season in the northern hemisphere as competition rises from West Asian suppliers.

According to energy intelligence firm Vortexa, India’s diesel exports were flat on an annual basis and rose 17 per cent month on month to 2.23 million tonnes (MT). Outbound cargoes of petrol rose roughly 6 per cent on an annual and monthly basis to 1.50 MT.

The Petroleum Planning and Analysis Cell (PPAC) has pegged diesel exports at 2.14 MT in May against 2 MT in April and 2.38 MT in April 2023. Export of petrol stood at 1.23 MT in May compared to 1.18 MT in April and 1.25 MT in May 2023.

Saturated Europe

Vortexa’s Head of APAC Analysis, Serena Huang, told businessline, “India’s gasoline (petrol) and diesel exports are up month on month in May, likely driven by strong refinery runs but lagging domestic demand. More diesel/ gasoil exports have headed towards Asia amidst a saturated European market that has been receiving healthy supplies from West Asia.”

India’s gasoline exports to Africa have also risen month-on-month, with lower supplies from the Middle East and South-East Asia creating opportunities for more supplies from India, she added.

On the demand scenario for the two auto fuels amidst the Summer travelling season in the Northern hemisphere, Huang pointed out that US gasoline imports have risen as refiners/ blenders prepare for the Summer driving season that has just begun. Meanwhile, imports into Europe are up marginally year-on-year, but weak diesel cracks suggest ample supplies in the region.

Going ahead for the remainder of the travel season, Indian diesel and petrol cargoes are expected to face competition from West Asian and African refiners. The summer season generally begins in May and ends in September.

“The seasonal increase in gasoline and diesel demand in the Northern hemisphere will still play out, but what is uncertain is the strength of this demand. Indian diesel/ gasoil exports to Europe are facing increased competition from rising West Asian supplies. Finished gasoline exports to Africa will further come under pressure with the start of Nigeria’s Dangote refinery towards the end of the year,” Huang explained.

Higher refinery runs

According to PPAC, the stocks of petrol and diesel reported higher inventories at the beginning of May. Diesel stocks also reported an inventory build up at the beginning of April.

Besides, the production and consumption of diesel during May this year stood at 10 MT and 8.4 MT, respectively. Similarly, petrol output and usage was 4.1 MT and 3.4 MT, respectively.

PPAC said that the consumption of petroleum products in May with a volume of 20.5 MT registered a minor de-growth of 1 per cent against 20.7 MT in May 2023. On a monthly basis, the consumption was higher by 3 per cent.

Indian refiners also processed higher quantities of crude oil in May. Total crude oil processed last month rose 1.3 per cent year on year and 6.5 per cent month on month to 23 MT. Production of petroleum products rose 0.5 per cent year on year and 2.6 per cent month on month to 24 MT during May.