New Delhi: As soaring jet fuel margins trigger a refining rush from Europe to the United States and parts of Asia, India is resisting the temptation to ramp up aviation fuel exports. Despite having surplus aviation turbine fuel (ATF) production capacity, refiners are prioritising domestic demand for petrol, diesel and LPG, reflecting the government’s broader focus on fuel security over windfall export gains.
“More people need LPG, gasoline and diesel every day than the need to fly,” Natalia Katona, a commodity analyst at Oilprice.com, told ThePrint, explaining why domestic fuel security remains a bigger priority for policymakers in India than taking advantage of high international jet fuel prices.
According to Katona, India remains structurally surplus in ATF production capacity. Even with domestic ATF demand expected to rise by around 10 percent year-on-year in 2025-26 to about 9.95 million tonnes, there is still room for export, without affecting local aviation fuel availability, she said.
Reliance Industries’ Jamnagar refinery, India’s largest jet fuel producer, for instance, exported around 1,00,000 barrels per day (bpd) of ATF before the West Asia conflict.
Sumit Ritolia, manager for oil markets and refineries at Kpler, pointed out that Indian jet fuel yields were around one percentage point lower year-on-year during March and April as refiners shifted production toward petrol and diesel. Strong domestic demand and government’s efforts to ensure adequate local fuel supplies have encouraged refiners to prioritise other fuels over aviation fuel.
Katona said India could technically be a larger ATF exporter in the current market, but policy considerations and fuel security concerns are limiting how refiners can respond. “India’s refining system has the capacity and ATF surplus, but not necessarily the full export freedom,” she said.
In March, the government imposed a Special Additional Excise Duty (SAED), or windfall tax, of Rs 29.5 per litre on ATF exports. The levy was raised to Rs 42 per litre in April before being gradually reduced to around Rs 9.5 per litre in June.
India’s cautious approach stands in contrast to refiners in Europe, the United States and parts of Asia, which are increasing ATF output as margins surge.
Refiners cashing in on jet fuel boom
Due to supply disruptions from the Middle East, there has been a sharp rise in ATF profitability.
According to Katona, the jet fuel crack spread on Brent crude has risen above $52 per barrel from around $19 a year ago in Europe. In Asia, the Singapore jet fuel crack on Dubai crude is around $51 per barrel compared with roughly $14 a year earlier.
Jet fuel crack refers to the difference between the price of crude oil and the price of refined jet fuel and is widely used as a measure of refining profitability.
These margins have encouraged refiners to maximise jet fuel production wherever possible.
According to Ritolia, disruptions to product flows from the Strait of Hormuz have exposed Europe’s dependence on imported jet fuel and pushed refiners to recover more kerosene and jet fuel from every barrel processed. “What began as a scramble to replace disrupted Middle Eastern supply has evolved into a broader rebalancing of the barrel,” he said.
Kpler data shows European jet fuel production grew by around 2,00,000 bpd year-on-year in March, while refinery yields increased more than two percentage points. The gains were seen across France, Italy, Spain, Germany, Greece and the United Kingdom.
Ritolia expects European refiners to maintain elevated jet fuel yields till August, generating roughly 2,25,000 bpd of additional supply, without significantly increasing crude processing rates.
However, there are still structural constraints for Europe. Katona noted that due to Europe’s strict climate policies, oil refineries are facing structural decline and aggressively transitioning into biofuel production, making the region more dependent on imports during periods of fuel shortages.
Similar to Europe, the United States has also responded to rising jet fuel prices. Ritolia estimates US refiners increased jet fuel yields by around 1.6 percentage points year-on-year in March, adding roughly 3,10,000 bpd of production. Most of this increase came from refinery optimisation rather than higher crude processing.
Katona said US jet fuel production has now climbed above 2 million bpd, while exports have reached about 2,80,000-3,00,000 bpd in recent months, much of which is heading to Europe and the UK.
“This is a classic margin-driven response,” she said. “US refiners are taking advantage of extremely strong transatlantic jet fuel premiums.”
Across Asia-Pacific, refiners are also trying to capitalise on high jet fuel margins, but the region faces a different set of challenges. Many refiners remain heavily dependent on Middle Eastern crude supplies and are affected by disruptions linked to the Hormuz crisis.
South Korea has emerged as one of the biggest beneficiaries of the current market. After jet fuel exports declined by 60,000 bpd to around 2,20,000 bpd in April, shipments rebounded to roughly 3,72,000 bpd in May, the highest level since 2020.
South Korean refiners have become important suppliers to Japan, Australia, New Zealand and parts of the US West Coast.
China presents a different picture. While Chinese refiners have the capacity to produce and export jet fuel, Katona said the government has prevented them from taking advantage of international jet fuel premiums.
“Beijing has been restricting fuel exports to prevent refiners from chasing international premiums at the expense of the domestic market,” Katona said.
Overall, the global refining industry is responding to the market signal differently with countries like the US, South Korea and several European nations increasing jet fuel output, but others like India and China, continue to balance export opportunities against domestic priorities.
(Edited by Viny Mishra)
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