Indian refineries are earning substantial profits from Russian oil – Blending ethanol has become a game changer.
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Highlights – India has started blending 20% ethanol in petrol this year, up from just 12% in 2023. This shift in domestic consumption has reduced petrol demand and increased exports.
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Indian oil refineries are steadily increasing petrol and diesel exports, which have now reached a multi-year high. This is largely due to increased crude oil processing capacity and the domestic blending of more ethanol with petrol. This has reduced domestic consumption and made it easier to export excess fuel abroad.
Cheap Oil from Russia and Rising European Demand
India buys approximately one-third of its crude oil needs from Russia. Following sanctions imposed on Russia by Europe and the United States, India began refining oil at a discount and is now exporting the surplus petrol and diesel. According to experts, these exports will help meet Europe’s winter heating oil demand and also boost the profits of Indian refining companies.
Record Processing and Exports
According to consultancy Wood Mackenzie, India’s crude oil processing capacity will increase by 1.3 to 1.6 million barrels per day this year to approximately 5.51 million barrels per day. Petrol exports could reach a record 400,000 barrels per day. Diesel (gasoil) exports are also expected to reach a 4-year high, especially considering European needs. According to data provider Kpler, India’s petrol exports will average 387,000 barrels per day in 2025, mostly destined for Asian countries.
Ethanol Blending Plays a Major Role
India began blending 20% ethanol in petrol this year, up from just 12% in 2023. This shift in domestic consumption has reduced petrol demand and boosted exports. Companies like Reliance Industries and Mangalore Refinery are capitalizing on increased profits in Asia and are increasing exports. Since the beginning of this year, petrol margins in the Asian market have increased by 51% to $1,112 per barrel.
A Big Deal for Europe:
Diesel and heating oil demand is expected to increase during the European winter. Meanwhile, refinery maintenance in Europe and the Middle East could tighten global supplies. Wood Mackenzie estimates India’s diesel exports to be 610,000 to 630,000 barrels per day in 2025, while Kpler estimates it at 560,000 barrels per day.
Recently, Reliance shipped nearly 2 million barrels of diesel to Europe in late August via a large tanker (VLCC), a shipment typically carried by smaller vessels. This move signals preparations for a larger supply boom.
What’s next?
Europe imposed new sanctions on Russia in July, saying it would stop importing petroleum products made from Russian crude oil after a six-month transition period. This will benefit countries like India, as demand for their supplies could increase further.
