Red Sea Crisis Drags Petroleum Exports In January, May Impact Trade Further

New Delhi, Jan 15 (KNN) India's petroleum product exports to Europe have significantly dropped in January due to heightened tensions in the Red Sea, declining from 350-400 thousand barrels per day in November and December to just 100 thousand barrels per day.

The rising threats in the Red Sea have compelled Indian exporters to choose longer routes via the Cape of Good Hope, leading to a 60-70 per cent increase in shipping costs.

Viktor Katona, lead crude analyst at Kpler, mentioned that despite exporting to Europe, Indian refiners prefer circumnavigating to Africa. This shift in export routes has altered India's petroleum product destinations, with increased supplies to East Asia and Africa compared to Europe.

The extended route from Jamnagar to Rotterdam takes 42 days via the Cape of Good Hope, significantly longer than the 24 days via the Suez Canal. This circumnavigation of Africa has resulted in a substantial rise in shipping costs for Indian product exporters.

The Red Sea tensions and the alternative shipping routes may contribute to a potential 7 per cent drop in India's exports in FY24, estimated at around USD 30 billion, according to the Research and Information System for Developing Countries (RIS).

This scenario could impact standalone refiners like RIL, MRPL, and CPCL, potentially affecting margins and exports to the European Union.

The overall export of petroleum products from India has already seen a decline, with a 7.5 per cent drop in November 2023 and a 15 per cent decrease in the first eight months of the current fiscal year.

(KNN Bureau)