India Raises Export Levies on Diesel and Jet Fuel as Global Supply Crunch Deepens

India raised taxes on exports of ‌diesel and jet fuel as the collapse of the US-Iran interim peace deal and renewed hostilities choked oil flows and tightened the outlook for fuel supply.

(Bloomberg) — India raised taxes on exports of diesel and jet fuel as the collapse of the US-Iran interim peace deal and renewed hostilities choked oil flows and tightened the outlook for fuel supply. The levy on diesel was increased to 15.5 rupees a liter for the second half of July, from 8.5 rupees earlier, according to a finance ministry notification. The tax on jet fuel was lifted to 14.5 rupees a liter, from 7.5 rupees.

The export duty on gasoline was lowered, however, to 2.5 rupees a liter, from 4 rupees. The higher taxes could curb exports just as shipments from India, one of Asia’s largest fuel suppliers, are headed for their highest level since September. Exports of products, such as diesel and gasoline, in July are seen about a fifth higher from a year earlier as refiners are cashing in on strong profit margins amid acute supply tightness in the US and Europe.

India’s exports of refined oil products have averaged 1 million barrels a day year to date, or about 6% of global seaborne shipments, according to Kpler data. Diesel was the most shipped fuel, accounting for 40% of the total volume, while gasoline made up 26% and jet fuel 9%. Diesel supplies have been squeezed after Russia banned exports of the fuel following Ukrainian drone attacks on its refineries.

New Delhi reviews the taxes every fortnight based on average international prices for crude oil and refined products during the preceding period. The mechanism allows the government to adjust duties in response to changes in global energy markets while prioritizing local fuel availability. India, the world’s fourth-largest refining hub, imports more than 85% of its crude oil requirement while exporting large volumes of refined fuels.

—With assistance from Akriti Sharma. (Updates with chart, export details in the fourth paragraph.)