New Delhi: India’s exports of petroleum products declined 16.3 percent by volume in the first five months of the current financial year, even as earnings from such exports rose 36.5 percent. Data from the Petroleum Planning & Analysis Cell (PPAC), under the Ministry of Petroleum and Natural Gas, shows how the US-Iran war and disruptions to shipping through the Strait of Hormuz have reshaped India’s refined fuel trade.
Export value rose to $21.7 billion during April-August 2026 from $15.9 billion in the corresponding period of 2025, primarily due to higher prices. This came despite export volumes falling from 25.7 million metric tonnes (MMT) to 21.5 MMT over the same period.
In August alone, petroleum product exports fell 13.1 percent year-on-year.
The decline in shipments reflects stronger domestic demand, disruptions to traditional export markets and changing global trade flows, rather than weak refining economics, according to energy market experts.
“India consumes most of its refined products domestically. Only around one-fifth of total output is exported,” Natalia Katona, a commodity analyst based in Abu Dhabi, told ThePrint.
She said India exported around 19.5 percent of its refined products output in February, before the Iran war began. This fell to 16-18 percent between March and June, even as monthly production remained steady at 22-22.5 MMT.
Diesel exports gain, but India loses traditional markets
Diesel exports remained profitable for Indian refiners as the price difference between Singapore diesel margins and Dubai crude rose to $75-80 per barrel, Katona said.
India exported around 20 percent of its diesel production in August, equivalent to roughly 530,000 barrels per day (bpd), up from an average of about 400,000 bpd between March and June.
Based on identifiable cargoes, major destinations for diesel included Turkey, Malaysia, Mozambique, Tanzania and South Africa. However, nearly half of the trade was difficult to trace because of ship-to-ship transfers in Egyptian waters, Katona said.
Singapore was also a major destination between March and May, when China restricted diesel exports and Asian markets faced shortages. China’s return to the export market, however, is now increasing competition for Indian refiners.
Petrol exports averaged around 260,000 bpd between March and August, down from 300,000 bpd a year earlier. South Africa, Tanzania, Australia and Malaysia were among the main destinations.
India’s petrol exports to the UAE, which accounted for around one-third of shipments before the conflict, largely disappeared after March as attacks and shipping disruptions affected key trading hubs at Fujairah and Jebel Ali.
Luke Wickenden, an energy analyst based in London at the Centre for Research on Energy and Clean Air (CREA), told ThePrint that East and Southern Africa had emerged as important markets for Indian refined products.
India’s exports to the region rose from 3.3 MMT to 5.7 MMT between March and July compared with the same period last year, with Tanzania, South Africa, Mozambique and Kenya accounting for much of the increase.
India has, however, lost ground in Europe. Between March and July, Indian products accounted for 3 percent of the European Union’s diesel and gasoil imports, down from 14 percent a year earlier following the ban on fuel refined from Russian crude. According to Wickenden, US refiners were the main beneficiaries of India’s loss.
More Russian crude, fewer export opportunities for India
The rise in Russian crude imports has helped Indian refiners replace some lost Gulf supplies but has not translated into higher overall petroleum product exports.
Wickenden said Gulf crude arrivals in India fell 41 percent between March and July, while Russia’s share of Indian crude imports rose from 38 percent to around 46 percent.
Vadinar refinery, India’s second-largest oil refinery operated by Nayara Energy, sourced all its crude from Russia during the first eight months of 2026, compared with 81 percent in 2025. Russia’s Rosneft owns 49 percent of Nayara Energy.
Russia’s emergence as a buyer of Indian petroleum products is also a recent development. It imported almost no oil products by sea between 2023 and 2025, before Ukrainian drone attacks on its refineries triggered a sharp rise in imports in August this year.
India supplied around 70 percent of Russia’s oil product imports in August, including 94 percent of its petrol imports, Wickenden said. The 120,000 tonnes of petrol, worth approximately $89 million, came from Vadinar and were sold by EU-sanctioned Nayara Energy to Rosneft. The shipments comprised three petrol cargoes loaded in June and July and delivered in August, with Rosneft the buyer for all three.
“In effect, India is partly allowing a desperate Russia to ship its own crude over to be refined and then import it back,” Wickenden said.
The trade comes amid growing scrutiny of Russian oil flows. Nayara has been under European sanctions since July 2025, while 94 percent of Vadinar’s product exports were carried by sanctioned tankers in the 12 months to July 2026, compared with none the previous year, according to Wickenden.
The Lindsey O. Graham Sanctioning Russia and Iran Act of 2026, signed by US President Donald Trump on 18 September, allows tariffs of up to 100 percent on countries buying Russian energy, potentially adding another uncertainty for Indian refiners.
Wickenden noted that India’s Russian crude purchases had also fallen after earlier US sanctions but recovered once waivers were granted.
Despite these risks, refining margins remain strong. Katona said high crude prices were unlikely to discourage Indian refiners as long as product margins covered feedstock costs. However, expensive freight, limited vessel availability and stronger competition from China could restrict India’s exports.
Rising domestic demand is another constraint, with petrol and diesel consumption increasing 7-8 percent year-on-year. Katona expects Indian fuel exports to reach their lowest level since the crisis began in the first quarter of 2027, when domestic consumption is typically very strong.
(Edited by Chingkheinganbi Mayengbam)
Also Read: Competitive edge or policy advantage? Think tank CSEP analyses India’s steel success story