The expansion is driven by a portfolio, but the opportunity is in diesel, according to XAnalysts founder and chief oil analyst Mukesh Sahdev.
India's long-planned refinery expansions are set to make it an even bigger diesel supplier in 2027, just as disruptions to Russian and Middle Eastern shipments have created an unexpected export opportunity for Indian refiners. State-owned refiners plan to add 16.5 million tons of annual diesel production capacity next year, executives said at an industry conference in Goa.
The expansion is driven by a portfolio, but the opportunity is in diesel, according to XAnalysts founder and chief oil analyst Mukesh Sahdev. Global diesel supplies are tight due to the US-Iran war, which has disrupted Middle Eastern fuel shipments, and attacks on Russian refineries and export restrictions, which have reduced supplies from another major producer.
Wholesale diesel prices have surpassed $200 per barrel in September, nearly double their prewar levels, and reached around $220 in Europe and the US, according to the International Energy Agency (IEA). The shortage persists despite weakening overall oil demand, as diesel consumption has remained comparatively resilient and inventories have fallen.
Indian refiners are well-positioned to benefit from the global diesel shortage, with Indian Oil Corporation, Hindustan Petroleum Corporation, and Bharat Petroleum Corporation all planning to increase diesel production. The country already produces more diesel than it consumes, and the additional volumes are coming onstream amid a global shortage, creating a commercial opportunity for projects originally designed around Indian fuel demand.
However, analysts caution that additional Indian production could make a meaningful difference to global supplies, but it cannot replace all the diesel lost due to disruptions affecting Russia and the Middle East. India also needs stronger commodity-trading networks and financial mechanisms to capture the full value of its growing refining capacity, according to Sahdev.
