The war in Ukraine and Western sanctions on Russia caused fuel prices to rise, boosting export earnings for Indian refiners.

In the fiscal year 2023-24, India experienced a significant decline in exports of diesel and petrol, dropping by a fifth to $33 billion due to falling international prices. Despite stable export volumes of 41.6 million metric tonnes, the decline in value was notable. Diesel, being the primary revenue generator for Indian refiners, saw a 24% decrease in export earnings, while petrol exports faced a 13% reduction in value, despite a slight increase in export volumes.

Reliance Industries and Nayara Energy, the two major private sector refiners, predominantly export diesel and petrol from India. The energy market dislocation caused by the Ukraine conflict and Western sanctions on Russia in early 2022 led to soaring fuel prices, resulting in record-high margins for refiners in 2022-23. However, as the market stabilized in 2023-24, earnings normalized, with international rates of petrol and diesel decreasing by about 15-20% on average.

Lower international prices benefited India’s import bills, particularly for petroleum products like liquefied petroleum gas (LPG), which decreased by 21% to $10.5 billion in 2023-24. Despite rising oil consumption driven by economic growth, increased vehicle sales, and improved access to fuel, India’s overall refined product import bill decreased by 13% to $23 billion.

The consumption of petrol, diesel, and LPG rose in 2023-24, reflecting the expanding economy and growing fuel demand in the country. Petrol consumption increased by 6.4%, diesel by 4.4%, and LPG sales grew by 4%. This surge in consumption underscores the significant role of fuel in India’s economic activities and transportation sector.