India's Diesel Exports To Europe Plunge 20% As US, Gulf Rivals Squeeze Margins

New Delhi, May 14 (KNN) India's diesel exports to the European continent experienced a substantial 20 per cent sequential decrease in April, falling to 2,10,000 barrels per day (bpd) from 2,62,000 bpd in March, according to data from energy cargo tracker Vortexa.

This decline can be attributed to heightened competition from suppliers in the United States and Gulf regions, compounded by waning demand within Europe, which collectively weakened profit margins on the fuel.

Europe remains a significant consumer of India's diesel exports, accounting for over 40 per cent of the total outbound shipments.

Nationwide, India's overall diesel exports contracted by 9 per cent to 5,17,000 bpd in April, down from 5,67,000 bpd in the preceding month. Conversely, exports destined for Asia exhibited a notable 33 per cent increase, rising to 69,000 bpd from 52,000 bpd over the same period.

Serena Huang, an analyst at Vortexa, offered insights into the dynamics influencing India's diesel export landscape. “Robust exports from the Middle East and the US to Europe, coupled with higher freight costs due to rerouting via the Cape of Good Hope, as well as demand weakness in Europe, will likely continue to constrain India's diesel exports to the European market,” she stated.

“Meanwhile, there is ample diesel supply in Asia, although refinery maintenance scheduled for this quarter is expected to reduce exports from Northeast Asia, which could present opportunities for Indian refiners to divert their cargoes eastward,” Huang added.

Indian refiners strategically serve various countries, shipping diesel cargoes to markets offering comparatively higher effective margins. Presently, tankers carrying Indian diesel predominantly take the longer route to Europe via the Cape of Good Hope to circumvent potential attacks by Houthi rebels in the Red Sea region. This rerouting inflates transportation costs and transit times, further diminishing the competitiveness of Indian cargoes in the European market.

Since the onset of the Ukraine conflict in early 2022, Europe has been actively seeking to replace Russian diesel with supplies from alternative sources, creating lucrative opportunities for Indian refiners. The high global prices enabled Indian refiners to generate revenues of USD 29 billion from diesel exports during the 2022-23 fiscal year. However, with prices declining in 2023-24, India's diesel export revenues fell to USD 22 billion.

Prominent exporters of diesel in India include Reliance Industries and the Rosneft-backed Nayara Energy.

(KNN Bureau)