Thanks to the launch of a new oil refining capacity, India's diesel fuel exports, which are set to grow next year, are intended to supply markets worldwide, including the US and Europe, which are experiencing fuel shortages. This is due to geopolitical conflicts disrupting fuel flows.
India's Minister of Petroleum, Hardeep Singh Puri, stated on Tuesday that state-owned oil refineries will increase their annual diesel production capacity by at least 15 million tons through the construction of a new refinery and the modernization of existing facilities. Puri told reporters at an industry conference in Goa that the country will not only process fuel for itself but also for the entire world.
The current global supply deficit and rising prices are caused by wars in the Middle East and in Russia and Ukraine. The situation worsened after Russia suspended exports in July to protect domestic reserves following attacks on its ports and refineries. This crisis led to record diesel prices in the US, prompting Washington to consider export restrictions until Donald Trump reaches an agreement with Vladimir Putin on releasing more fuel onto the global market.
This chaos has created an opportunity for India, which is already one of the largest global suppliers of diesel used in agriculture, factories, and heavy transport. According to Kpler data, this year the South Asian country surpassed Russia, becoming the second-largest global exporter of diesel fuel. The expansion of refineries may further strengthen India's share in global fuel markets, as Goldman Sachs Group Inc. forecasts continued supply tensions until 2027.
Chairman Avinder Singh Sachney, representing Indian Oil Corp., the country's largest refiner, noted that after completing expansions, which will add over 17 million tons of crude oil refining capacity across three refineries, the company expects to produce up to 9 million tons more diesel annually starting next year. Chairman Vikas Kaushal of Hindustan Petroleum Corp. reported that thanks to the expansion of a new refinery in Rajasthan with a capacity of 9 million tons per year, the company will add about 4 million tons of diesel. Additionally, the Numaligarh Refinery Ltd. division of Oil India Ltd. will increase fuel production by approximately 3 million tons, and Chairman Sanjay Hanna of Bharat Petroleum Corp. stated that the company will add 1.5 million tons starting from 2028.
According to the Ministry of Petroleum data, in the first half of the financial year that began in April, Indian refiners produced 59 million tons of fuel, while domestic consumption was about 46 million tons. Puri also clarified that the country's total refining capacity should increase from the current 267 million tons to 300 million tons per year, and then reach 400 million tons within a few years.