India’s refined oil export sector encountered a substantial setback in March, witnessing a significant decline of 15% compared to the previous month, according to data from intelligence firm Vortexa.
This downturn comes on the heels of a brief stabilisation observed in the preceding month, following a tumultuous start to 2024 marked by drastic declines in export volumes. The decline in India’s refined oil exports can be attributed primarily to weakening export margins, compounded by ample supplies from the United States and the Middle East to key markets in Asia and Europe. The preference of European countries for sourcing oil products from the US and the Middle East has further dampened demand for Indian exports, exacerbated by logistical challenges stemming from the Red Sea crisis. Vessels navigating from India to Europe are compelled to opt for longer routes around Africa, leading to increased freight costs and reduced competitiveness of Indian exports. In March, India exported a total of 1.28 million barrels per day of refined oil products, marking a notable decrease of 12.5% from the previous month. Exports to Europe and Asia witnessed declines of 6.5% and 22%, respectively, further reflecting the challenges faced by India’s export sector.
Despite efforts to mitigate the impact of the Red Sea crisis and stabilise export volumes, exports to Europe remain below the levels observed in late 2023, failing to reach the average daily volume of 350,000-400,000 barrels supplied in November and December. While India’s petroleum product exports have shown marginal growth, imports of these items are rising at a faster rate, leading to a decline in the country’s self-sufficiency in oil products. Recent data from the government’s Petroleum Planning and Analysis Cell indicates a downward trend in self-sufficiency, highlighting the need for strategic interventions to bolster domestic production and mitigate import dependence. Moreover, the modest 3% growth projected in India’s domestic consumption of petroleum products for the upcoming financial year underscores the need for comprehensive policy measures to stimulate demand and foster sustainable growth in the petroleum sector. As India navigates the complexities of global trade dynamics and domestic demand, strategic planning and proactive measures will be essential to safeguard the country’s energy security and economic resilience.
