Key facts
- Indian and U.S. oil refiners are profiting from global fuel supply disruptions caused by wars in Iran and Ukraine.
- Refineries in these countries are increasing exports to nations previously dependent on Middle Eastern and Russian supplies.
- U.S. distillate fuel exports reached a record 1.9 million barrels per day in early August.
- Global refining throughput has decreased significantly compared to the previous year.
- U.S. gasoline inventories are below the five-year seasonal average, while diesel margins have reached record highs.
Oil refiners in India and the United States are experiencing significant profit increases due to global fuel supply disruptions stemming from the wars in Iran and Ukraine. These geopolitical events have driven up prices and created scarcity, leading importers to seek alternative sources. Unaffected by attacks or blockades, Indian and U.S. refineries have ramped up exports to regions that previously relied on supplies from the Middle East and Russia.
Analysts and traders anticipate that as long as these supply disruptions persist, Indian and U.S. refiners will continue to generate substantial profits from higher export volumes. Lin Ye, a vice president at Rystad Energy, noted that India is positioned to act as Asia's swing supplier during periods of market tightening, with export-focused refineries like Reliance and Nayara consistently operating at high utilization rates.
Government data indicates that U.S. refiners exported distillate fuels, including diesel and heating oil, at a record pace of 1.9 million barrels per day in the week ended August 7. Jet fuel exports were also near record levels. This surge in exports is occurring while global refining throughput has fallen significantly from the previous year, with demand remaining robust.
U.S. fuel exporters have primarily targeted European markets, which were major importers of Middle Eastern oil, as well as Latin American nations that previously depended on Russian diesel. Brazil, for instance, has doubled its diesel imports from the U.S. following Russia's extended ban on fuel exports. Indian refiners are also a key supplier to Asian markets, particularly for gasoline.
Competition in the export market may arise from China, which has recently relaxed its export limits. However, other exporters like South Korea face constraints due to crude supply uncertainties. Both the U.S. and India are in their peak seasons for gasoline and transportation fuel consumption, which limits the volume of fuel their refiners can export domestically.
Global supply-demand balances have been highly volatile, leading to faster inventory draws. Wood Mackenzie estimates that Asian gasoline inventories could remain below the five-year average through 2026. U.S. refiners have prioritized jet fuel production for export over gasoline, contributing to lower-than-usual gasoline stockpiles. These refiners are operating near maximum capacity, driven by strong financial incentives as refined products fetch higher prices than crude feedstock. However, U.S. companies face pressure from President Donald Trump to lower domestic gasoline prices, a politically sensitive issue during an election year.