India and the U.S. Keep the Oil Flowing While Global Supplies Run Low

India and the United States are maximizing oil exports as global supplies dwindle due to conflicts in Iran and Ukraine. Refineries in both countries are operating near capacity, filling the gap left by Russian and Gulf oil in Asian, European, and Latin American markets. U.S. refiners exported a record 1.9 million barrels of diesel and heating oil per day in the week ending August 7, with jet fuel exports just below May's record.

Brazilian diesel imports from the U.S. more than doubled compared to June, following Russia's fuel-export ban.

India's export-focused refineries, led by Reliance and Nayara, have maintained high utilization rates to compensate for the Middle Eastern and Russian suppliers' reduction. Analysts predict India will continue acting as Asia's swing supplier when regional markets tighten. Global refining throughput fell to approximately 89 million barrels per day in July, down 5 million barrels year-over-year, while global oil demand stayed above 100 million barrels.

The U.S. and India have divided the demand, resulting in profits during a supply strain period. However, U.S. and Asian gasoline inventories are below their five-year average. China, a potential competitor, began relaxing export limits in July, boosting fuel shipments to 1.1 million tons, or roughly 9.3 million barrels, from just 240,860 tons in June.

The longevity of this situation depends on domestic gas prices in the U.S., which are averaging $5.47 per gallon, a nearly 50% increase year-over-year. President Trump is urging refiners to maintain low domestic prices ahead of November's midterm elections. India caps exports to protect its 75-80 days of domestic inventory. Consequently, there is limited wiggle room for further expansion.