India's refineries have operated at 105%-108% capacity for six months due to soaring diesel demand and a tight global market. Refiners are prioritizing diesel production over jet fuel, with record-high diesel cracks driven by Middle East tensions and supply constraints.
The high utilization rates and prioritization of diesel production by Indian refineries indicate significant strain on global middle distillate supply chains, impacting fuel prices and availability worldwide.
India's refineries have been running at exceptionally high utilization rates, between 105% and 108%, over the last six months. This surge is driven by soaring domestic demand for diesel and a tightening global fuel market, exacerbated by ongoing Middle East tensions and supply disruptions.
Nandakumar Pillai, a director at Mangalore Refinery and Petrochemicals Limited (MRPL), stated at the APPEC petroleum conference in Singapore that most Indian refiners possess complex designs allowing them to process a wide variety of crude oils and maintain high operational flexibility. MRPL, with a capacity of 300,000 barrels per day, is expected to continue running above 100% capacity until March 2027.
Indian refiners are currently prioritizing diesel production, even at the expense of jet fuel, to meet domestic demand. Global diesel prices are climbing, and diesel cracks have reached all-time highs due to constrained supply from the Middle East and Russia, with refinery runs elsewhere insufficient to offset losses. Analysts highlight diesel and other middle distillates as the primary stress points in the oil market, rather than crude oil itself.
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