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

India's refineries have been operating at 105% to 108% capacity utilization over the past six months due to soaring diesel demand and tightening international fuel markets caused by the Middle East crisis. As the world's third-largest crude oil importer, refinery capacity utilization in India has remained between 105% and 108% since the war began.

At an APPEC petroleum conference in Singapore, Nandakumar Pillai, a director at Mangalore Refinery and Petrochemicals Limited (MRPL), explained that most of their refineries can process a wide range of crude with API values ranging from 16 to 45 or 48. MRPL's refinery in Karnataka's south can process 300,000 barrels per day (bpd) and has versatile, complex secondary processing units that enable it to produce various quality products.

Pillai told Reuters that MRPL will maintain production above 100% until March 2027. Due to rising global diesel prices, soaring domestic diesel demand, and a severe shortage of global middle distillate supply, Indian refineries are currently prioritizing diesel production over jet fuel. The ongoing re-escalation in the Middle East and Russia's diesel export ban have pushed middle distillate cracks to all-time highs.

Analysts have been warning for weeks that diesel and other fuels are the most significant stress test in the oil markets, not crude oil.