New Delhi, November 6 — India’s fuel exports declined sharply by 21% year-on-year in October 2025, as soaring domestic demand and refinery maintenance shutdowns curtailed overseas shipments. The drop comes during a period of strong internal consumption driven by the festive season, agricultural activity, and industrial rebound.
According to preliminary trade data from the Ministry of Commerce and Industry, total petroleum product exports stood at $4.8 billion in October, compared to $6.1 billion in the same month last year. The sharpest decline was recorded in diesel and aviation turbine fuel (ATF) exports, both key components of India’s refined products basket.
Domestic Demand Surges During Festive Season
The primary factor behind the export dip is a spike in local consumption, particularly of diesel, petrol, and LPG.
With the onset of the Diwali and harvest season, fuel use in transportation, logistics, and rural machinery surged to its highest level in nearly 18 months. Official estimates suggest domestic diesel demand rose 9.3% month-on-month, while petrol consumption increased by 6.8%.
“India’s refiners prioritized domestic supply to ensure adequate availability during the festive season and agricultural peak,” said Vivek Bharadwaj, Energy Secretary, Government of India. “The short-term decline in exports reflects a demand reallocation, not a structural slowdown.”
HPCL and Nayara Energy Face Refinery Snags
Adding to the export constraints, two major private refiners — Hindustan Petroleum Corporation Limited (HPCL) and Nayara Energy — faced temporary operational disruptions in October.
HPCL’s Vizag refinery (with a capacity of 9 million tonnes per annum) underwent a planned maintenance shutdown that lasted two weeks, impacting throughput. Meanwhile, Nayara Energy’s Vadinar refinery faced unexpected logistical bottlenecks and supply constraints linked to feedstock arrivals.
“Both HPCL and Nayara had to reduce export allocations in favor of domestic dispatches. Refinery utilization dropped to around 86%, compared to the 95% average seen earlier this year,” said an industry official familiar with the matter.
State-run Indian Oil Corporation (IOC) and Bharat Petroleum Corporation Limited (BPCL) offset part of the shortfall but also redirected volumes to meet rising internal demand.
Diesel and ATF Exports Hit Hard
Diesel exports — India’s largest refined fuel export — were the hardest hit, plunging nearly 25% in volume terms. Aviation fuel shipments dropped by 17%, impacted by reduced refining margins and higher local jet fuel demand as domestic air travel rebounded.
Global refiners have been battling narrower profit margins due to falling diesel cracks and softer crude oil prices in recent weeks. Benchmark Brent crude hovered near $80 per barrel in late October, its lowest in two months, reducing arbitrage opportunities for Indian exporters.
“Margins on diesel exports to Europe and Africa have weakened due to inventory build-ups. With India’s domestic market paying better premiums, refiners naturally rebalanced supply inward,” said Sandeep Nayyar, Senior Analyst at ICICI Securities.
Export Decline Impacts Trade Balance
The fall in petroleum exports, which account for nearly 18% of India’s total outbound trade, weighed on October’s overall merchandise exports, which slipped 5.7% from September. However, officials stressed that higher domestic consumption supports GDP growth, offsetting the trade-side impact.
India remains one of the world’s top fuel exporters, with over 250 million tonnes of refining capacity and a growing presence in global diesel markets, particularly in Southeast Asia, Africa, and Europe.
Refining Margins and Outlook
Refining margins — the profit earned from turning crude into fuel — narrowed in October due to weaker global demand and increased competition from Chinese refiners. Singapore gross refining margins (GRMs) averaged $4.1 per barrel, down from $6.7 in September.
Analysts expect the situation to stabilize in December–January, once refinery operations normalize and domestic demand eases post-festive season.
“We anticipate fuel exports to rebound gradually in Q4 FY25 as refinery maintenance concludes and export economics improve. However, domestic prioritization will continue through winter,” said Ravi Sharma, Head of Energy Research, Crisil Ratings.
Policy Perspective: Balancing Local Needs and Global Trade
The government has maintained that domestic energy security takes precedence over export commitments. With India’s fuel consumption forecast to rise by 4–5% annually over the next five years, refiners are under pressure to expand capacity.
HPCL, BPCL, and IOC have collectively announced ₹1.5 lakh crore in refinery expansions by 2028, including new greenfield projects and biofuel integration.
Private players like Reliance Industries and Nayara Energy are also investing heavily in petrochemical diversification and renewable integration to hedge against export volatility.
Outlook: Cautious Optimism
While the 21% decline in October exports marks one of the steepest monthly falls since 2020, experts see it as temporary and cyclical. As international demand revives and refinery maintenance concludes, shipments are expected to rebound by early 2026.
“India’s refining ecosystem remains resilient. This dip underscores the flexibility of our refineries to pivot between domestic and export priorities as needed,” said a senior official from the Ministry of Petroleum & Natural Gas.
With global energy markets rebalancing and domestic consumption staying strong, India’s refiners are expected to strike a careful balance — powering the nation’s growth at home while maintaining their export footprint abroad.
