India is set to export approximately 1.55 million barrels per day (bpd) of refined petroleum products in July, nearly double the 866,000 bpd exported in May, according to data from commodity analysts Kpler. This surge in exports comes amid rising refining margins following the recent escalation of the Middle East conflict, which has disrupted traditional crude supplies. The expected July volumes represent the second-highest level recorded in Kpler's data series since 2017.
Key Details
The increase in exports is attributed to a tightening fuel market in Asia, as Indian refiners aim to capitalize on soaring margins. The U.S.-Iran ceasefire's collapse two weeks ago has further fueled these margins, encouraging refiners to ramp up production. However, the ongoing conflict in the Middle East poses risks of delays in crude supply deliveries, potentially impacting Asian refiners' processing rates in the coming weeks.
Background
Additionally, Indian refiners have increased their purchases of Russian oil, as discounts on this crude have disappeared due to the supply disruptions from the Middle East. Bharat Petroleum Corporation Limited (BPCL) has secured crude supplies for August and is actively seeking cargoes for September delivery, as stated by Vetsa Ramakrishna Gupta during the company's quarterly earnings call. The rising crude costs are expected to squeeze profit margins for Indian refiners.
The anticipated rise in fuel exports could alleviate some pressure on Asian fuel markets, which are facing supply challenges. However, the increased reliance on Russian oil may lead to higher costs for Indian refiners. Investors will watch for updates on crude supply deliveries from the Middle East, which could significantly influence refining operations and margins in the region.