India’s export of aviation turbine fuel (ATF) could touch an all-time monthly high in June and the country is likely to be Europe’s biggest source of jet fuel in July, which also marks the peak of the continent’s summer travel season, as per an analysis of data shared by commodity market analytics and intelligence firm Kpler.
India’s ATF export volumes so far in June have averaged at a record high of 208,433 barrels per day (bpd). As per Kpler data, the previous peak of 206,871 bpd was in June 2018. More than half of the dispatched ATF volumes from India this month are headed for Europe, where they are likely to arrive in July as the voyage usually takes about a month.
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As per Kpler’s estimates, European imports of ATF in July are likely to be around 435,482 bpd, of which 131,136 bpd, or over 30 per cent, are likely to be from India. Indian refiners, particularly export-oriented private sector players Reliance Industries and Nayara Energy, have emerged as major suppliers of refined petroleum products to Europe as the continent shuns Russian crude oil and petroleum fuels over the war in Ukraine. Interestingly, this comes alongside Indian refiners snapping up discounted Russian crude, leading to the perception that products derived from Russian barrels may be reaching European shores via India.
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The Kpler data shows that India had the biggest share in Europe’s jet fuel import deliveries in April and May as well, but volumes declined considerably in June with imports from Kuwait registering a healthy growth.
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July falls in the middle of the European summer travel season that lasts from June to August. The period usually sees high travel demand in the continent, and consequently, jet fuel consumption there also goes up. Europe’s jet fuel import data of the past few months shows that the continent’s major sources of jet fuel are Kuwait, India, South Korea, United Arab Emirates, and Saudi Arabia.
According Kpler’s Lead Crude Analyst Viktor Katona, the jump in India jet fuel exports is timely from the point of view of Indian refiners. “This (high ATF export volumes) comes in very handy for Indian refiners as the monsoon season has historically hindered domestic Indian fuel demand. So, having plentiful export outlets help maintaining high refinery run rates,” said Katona. Demand for fuels and other petroleum products tempers during the monsoon in India due to lower demand for transportation fuels and refined products used in some industries where work slows down because of the rains.
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According to Katona, with the Indian government doing away with the cess on jet fuel exports on March 4, exports of the fuel are unimpeded. From July 1, 2022, the government had imposed windfall gains tax by way of cesses on domestic crude oil and exports of refined fuels – petrol, diesel, and ATF to tax super-normal profits of oil producers and fuel exporters due to the surge in global oil prices and fuel margins.
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Although India, the world’s third-largest consumer of crude oil, depends on imports to meet over 85 per cent of its oil requirement, the country is a net exporter of petroleum products thanks to its refining capacity of 250 million tonnes per annum, or around 5 million bpd, which is higher than its domestic demand. As a large refining hub that has ramped up purchases of discounted Russian oil, India now finds itself playing an increasingly prominent role in the global crude oil and refined products supply map.
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Even as the West was initially irked at India’s rising purchases of Russian oil in the aftermath of Moscow’s invasion of Ukraine, major Western powers like the US have come to terms with the rising supply of Indian refined products to Europe. This is mainly because in their view, refiners in countries like India are ensuring that the global oil and refined products market remains balanced and adequately supplied, despite Russian oil and products being shunned by numerous countries.
In fact, various experts see higher purchases of Russian oil and rising exports of petroleum products to Europe from countries like India as critical for the success of the price caps on Russian oil and refined products imposed by G7 countries and their allies without causing a global supply shock.