India’s Refineries Run at Up to 108% as Diesel Demand Surges

India's refineries have been operating at capacity levels of 105% to 108% over the past six months, driven by a surge in diesel demand and tighter international fuel markets due to the ongoing Middle East crisis. According to a senior executive from Mangalore Refinery and Petrochemicals Limited (MRPL), most of the country's refineries are capable of processing various crude types, ranging from an API value of 16 to 48.

MRPL's refinery in Karnataka has a daily processing capacity of 300,000 barrels and is designed with complex secondary processing units for high flexibility in handling crude oils of different API values.

MRPL's operations will continue to run above 100% until March 2027, as stated by Pillai during the APPEC petroleum conference in Singapore. All Indian refineries are currently focusing on diesel production due to soaring domestic diesel demand and a global shortage of middle distillate supply. Diesel prices have reached record highs because of constrained supply in the Middle East and Russia, with the U.S.-Iran war and drone attacks on Russian refineries exacerbating the situation.

The re-escalation of tensions in the Middle East and Russia's diesel export ban pushed middle distillate cracks to all-time high levels last week. Analysts have been warning for weeks that diesel and other fuels are the most significant stress test for the oil markets, rather than crude oil itself.