Gaining momentum: Petro product exports fire up after fall in January

In Feb, country regains market share in diesel shipments, India's most-valued export to Europe, putting a check on US expansion

India’s petroleum product exports, one of the country’s biggest export earners, rose 23 per cent in February compared to the previous month, arresting the growing clout of the United States in Europe's lucrative fuel market, according to industry officials and ship tracking data. This comes as oil tankers sailed around Africa to avoid the conflict-struck Red Sea route.

In January 2024, India’s oil product exports had fallen by 19 per cent compared to December 2023. Shipments of diesel, India's largest fuel export to Europe, its most lucrative market, had crashed by 82 per cent.

February sales of diesel to Europe nearly tripled to 159,000 barrels per day (bpd) compared to January.

In November, prior to the Houthi rebel attacks on oil tankers, India had a share of 12.3 per cent of the European market compared to 9 per cent for the US.

In January, after the attacks intensified, the US share rose to 11 per cent, compared to India's share crashing to 2 per cent. In February, India's market share bounced back to 8 per cent, while that of the US stayed flat. 

The fresh push in February into European markets was led by Reliance Industries, which sent diesel, gasoline, and jet supplies around the Cape of Good Hope.

Reliance accounted for around 65 per cent of India’s overseas fuel shipments last month, according to data from market intelligence agency Kpler.

European diesel and jet fuel prices rose in recent months because of reduced US supplies, and longer transit times for cargoes from Asia, including West Asia, Vitol chief executive officer (CEO) Russell Hardy said at an event in London this week.

Higher prices will help Indian refiners, which have to contend with higher freight and insurance costs because of longer voyages.

Overall, petroleum product exports, led by diesel and petrol, rose to 1.35 million bpd in February. Diesel shipments in February surged 32 per cent to 586,000 bpd compared to January, early data from Kpler shows.

“We did see a significant impact of the conflict on India's petroleum exports, especially in January. This tumultuous event caused a sharp decline in exports of Indian petroleum products, particularly diesel. The consequences of this event were especially evident in India's exports to Europe,” said Darshan Ghodawat, CEO, AVA Global Logistics.

The attacks by Yemen-based Houthi rebels on oil tankers in the Red Sea, amid a reduced availability of discounted Russian crude in the last few months, affected earnings from fuel exports this financial year.

Petroleum exports contributed $57.3 billion in 2022-23, accounting for 12.7 per cent of India’s exports by value. Until January this financial year, it amounted to $39.2 billion, a 20 per cent fall from the year-ago period, over lower realisations.

The number of vessels carrying diesel from around the world and transiting the Suez Canal declined to 45 this month, from 87 in December 2023. And, vessels that went around the Cape of Good Hope increased to 70 as of February 25, according to Serena Huang, head of Asia-Pacific market analysis for market intelligence agency Vortexa.

Only four tankers carrying fuels from India transited the Suez in February compared with three in January and 18 in December, according to Kpler data. 

Last month, Pollux, a Russian oil tanker carrying crude to India, was struck by a missile after crossing the Suez.

The voyage around South Africa adds anywhere between 4,000 and 6,000 additional miles, delays deliveries by weeks, and inflates costs.

Diesel is India’s biggest fuel export earner, accounting for 44 per cent of the oil product volumes exported. However, India has been losing market share to the US since the conflict in the Red Sea began last December.

Shipments of diesel and gas oil to Europe bounced back in February from a two-year low of 55,000 bpd in January.

The rebound in Indian shipments last month has also coincided with a drop in US diesel supplies to Europe. The US shipped around 227,000 bpd this month to Europe compared with 252,000 bpd in January and a record 397,000 bpd in December.

Shipments were lower because many US refineries were shut down for regular maintenance in February. It remains to be seen if India can improve on its February levels once US refiners come out of maintenance this month.

Also, India has found new markets, besides its traditional ones such as the Netherlands, for diesel. Togo, a small country in West Africa, received a record 79,000 bpd in February, and shipments to neighbouring Bangladesh doubled to 72,000 bpd, Kpler data shows.

The US and UK have been conducting air strikes against Houthi rebels in Yemen since January. These are aimed at stopping the group from targeting shipping in the Red Sea.