India has raised its export levies on diesel and jet fuel, effective from July 16, in response to global supply constraints caused by ongoing geopolitical conflicts. The export duty on diesel increased to $0.19 (15.5 rupees) per liter from $0.10 (8.5 rupees), and on jet fuel to $0.18 (14.5 rupees) per liter from $0.09 (7.5 rupees). Conversely, the export duty on gasoline was reduced to $0.03 (2.5 rupees) per liter from $0.05 (4 rupees).
These adjustments are part of India's fortnightly review of windfall taxes, which are directly tied to international fuel prices and refining margins. The government's decision aims to moderate refiners' profits from overseas sales and secure additional revenue during a period of high crude oil prices. This move comes as the global fuel market, particularly for diesel, is exceptionally tight due to low inventories, refinery disruptions, and reduced Russian exports.
Analysts, including Ole Hansen, Head of Commodity Strategy at Saxo Bank, note that the primary stress in energy markets is currently in refined products rather than crude oil. Despite Brent crude rallying above $80, diesel, gasoil, and jet fuel continue to command strong premiums. The increased duties could potentially curb India's fuel exports, which is concerning for a global market already facing shortages, especially after Ukraine's drone attacks impacted Russia's refining capacity. India, being the world's fourth-largest refining hub, was set to export about 1 million barrels a day of petroleum products in July, approximately 20% higher than usual.
The revised taxes are significantly lower than the peak levels seen in the early stages of the Iran conflict, when export taxes were three to four times higher. The Indian government had previously restricted industrial and commercial consumers from purchasing fuel from retail stations between June 11 and July 1 to ensure equitable supply, citing disruptions in global petroleum supply chains. These measures were implemented after bulk consumers shifted to retail pumps due to a widening price gap, with retail diesel in Delhi priced at $1.15 (95.20 rupees) per liter while bulk buyers paid $1.62 (134.50 rupees) per liter. The lifting of these curbs became effective July 1, just prior to the latest tax adjustments.
