Oil refiners in India and the U.S. are reaping a bonanza as wars in Iran and Ukraine have disrupted global fuel supplies, driven up prices, and left importers scrambling for barrels at the height of summer driving season in the Northern Hemisphere.
Unhindered by attacks or shipping blockades, refineries in India and the U.S. have ramped up exports to nations that previously relied on purchases from the Middle East and Russia. As long as wars disrupt those supplies, Indian and U.S. refiners should keep pocketing billions of dollars from higher exports, analysts and traders said.
"India will continue to act as Asia's swing supplier when regional markets tighten," said Lin Ye, a vice president at consultancy Rystad Energy.
Consistently high utilization at export-focused refineries such as Reliance and Nayara has enabled India to respond to tightening regional balances, Ye added.
In the U.S., refiners exported distillate fuels, which include diesel and heating oil, at a record pace of 1.9 million barrels a day in the week ended August 7, government data showed, with jet fuel exports of 443,000 bpd just shy of the record 455,000 bpd hit in May.
Global refining throughput fell to about 89 million barrels per day in July, down 5 million barrels per day from last year, according to data from the International Energy Agency. Global oil demand is over 100 million bpd, per IEA figures.
BUYER DEMAND REMAINS RESILIENT
Imports from Indonesia, Asia's largest gasoline buyer, have remained firm, with consumption in August at around 11-12 million barrels, compared with 9-10 million barrels last month, a Singapore-based trader said.
Indonesia usually purchases 88- to 92-octane grades of gasoline, mostly from India, Singapore and South Korea. Rystad estimates Indonesian demand to average at around 636,000 bpd in the third quarter and 641,000 bpd in the fourth, compared with an annual average of 631,000 bpd in 2025.
Indonesia's fuel demand should be relatively higher this year, at about 690,000 bpd because the country's highly subsidized fuel market was not hit as hard by the crude price shock, according to consultancy Wood Mackenzie.
U.S. fuel exporters have so far focused on capturing European markets that had been major importers of Middle Eastern oil, and nations in Latin America and elsewhere which earlier relied on Russian barrels, Kpler data showed.
Brazil, one of the top buyers of Russian diesel, imported 196,000 bpd of diesel from the U.S. last month, more than double the volumes in June, after Moscow extended a ban on fuel exports to January 2027, Kpler data showed.
TAMING THE DRAGON
Indian and U.S. refiners may face competition only from China, which has historically dominated fuel exports to Asia.
"Other exporters such as South Korea offer limited additional volume growth as uncertainty over crude supply is weighing on refinery runs," Wood Mackenzie said.
As for fuel demand, the U.S. and India are in the middle of their peak gasoline and transportation fuel consumption seasons, restricting the amount of fuel their refiners can export.
U.S. gasoline demand averaged close to 9 million bpd last week, about even with last year, government data showed. Jet fuel demand in the country averaged about 2 million bpd last week, well above the 1.6 million bpd recorded last year at the same time.
India is also widely expected to be a key driver of global fuel demand for the foreseeable future, with consumption expected to rise through the next decade, which should keep more fuel within the country.
BALANCING ACT
Global supply-demand balances have shifted wildly during the wars, traders and analysts said, volatility that has caused inventories to draw faster than they can be replenished.
Wood Mackenzie estimated Asian gasoline inventories could remain below the five-year average through the rest of 2026, averaging around 197 million barrels for the remainder of the year, compared with around 207 million barrels in the first half of the year.
"If supply disruptions in the Middle East persist, inventory levels could fall below our forecast," Wood Mackenzie said.
U.S. refiners have prioritized jet fuel production over gasoline due to stronger export demand for the aviation fuel. That has kept gasoline inventories lower than usual for this time of year: at 208.7 million barrels as of August 7, the U.S. gasoline stockpile was about 6% below the five-year seasonal average, government data showed.
U.S. refiners have also been running close to maximum capacity almost non-stop since the Iran war started, and analysts have questioned how long that can be sustained. They have the financial incentive to keep up the pace, since some refined products are fetching twice the value of feedstock crude, Gulf Oil analyst Tom Kloza said.
Yet U.S. companies are also feeling pressure from President Donald Trump to lower domestic gasoline prices, a political flashpoint for his Republican Party which is campaigning to keep its slim majorities in Congress during November midterm elections.
The U.S. Energy Information Administration this month hiked its average retail gasoline price forecast for 2026 to $2.91, about 6% higher than its prior forecast yet much lower than the current average pump price which is over $4 a gallon.
To satisfy Trump's demands, U.S. refiners must walk a fine line between keeping the domestic market well-fed even as they pursue high export margins.
"Diesel cracks could correct lower by $20 per barrel if the White House simply mentioned possible export curbs, and that would take prices down nearly 50 cents a gallon in a heartbeat," Kloza said.
The average price for diesel fuel at a U.S. pumping station was $5.47 a gallon as of Tuesday, nearly 50% higher than last year, according to motorist association AAA.
U.S. diesel margins, measured as the difference between the diesel futures contract and U.S. West Texas Intermediate crude futures , hit a record high of over $102 a barrel on Monday after fresh attacks on refineries in the Middle East and Russia over the past two weeks.
