India has emerged as the world's second-largest seaborne diesel exporter in 2026 so far, behind the US, accounting for roughly 10% of global shipments.
The Russia-Ukraine war had already strained global diesel supplies. The war in West Asia has added to the pressure. As supplies from traditional exporters come under pressure, India is stepping in to fill part of the gap. The question is how long it can sustain this role.
But first, let's understand where the global diesel market stands.
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Why the global diesel market is under pressure
The US-Israel war with Iran has disrupted oil flows through the Strait of Hormuz and Bab al-Mandeb. According to preliminary Kpler data, combined oil flows through the Strait of Hormuz, Bab al-Mandeb and the Suez Canal fell to 9.99 million barrels per day in September, 61% below their February pre-war level.
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The Russia-Ukraine war has added more pressure. Ukrainian drone attacks left about half of Russia's refining capacity offline by late August, according to S&P Global Energy. By September, three of its six largest diesel-producing refineries had halted or reduced output.
The International Energy Agency (IEA) estimates that net exports of diesel / gasoil from the Gulf and Russia fell by 1.6 million bpd between February and August. Those two regions accounted for almost 45% of global seaborne diesel/gasoil trade in February.
This supply shock has translated into higher prices and shortages. European diesel prices have more than doubled from pre-war levels, while US distillate inventories fell to their lowest September level since 1982.
The IEA expects the diesel market to return to surplus in early 2027. However, the additional supply will not be enough to rebuild the inventories depleted in 2026. Diesel markets could therefore remain tight well into 2027, depending on how quickly Gulf supplies recover.
Why Russian diesel may have limited impact
With US retail fuel prices under pressure ahead of the midterm elections, the administration considered restricting diesel exports to increase domestic availability. But it dropped the idea. It has instead temporarily allowed certain transactions involving Russian diesel. The announced supplies could total around 36 million barrels over the coming months, although not all the volumes are guaranteed to materialise.
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That is because Ukrainian attacks have damaged Russian refineries. Also, Russia restricted exports earlier to increase domestic supply. Therefore, the IEA expects this to have little impact on global supplies. Goldman Sachs estimates that the initial shipments could lower wholesale diesel prices in the US and Europe by just $1–$2 per barrel.
Why the global diesel market is under pressure
The US-Israel war with Iran has disrupted oil flows through the Strait of Hormuz and Bab al-Mandeb. According to preliminary Kpler data, combined oil flows through the Strait of Hormuz, Bab al-Mandeb and the Suez Canal fell to 9.99 million barrels per day in September, 61% below their February pre-war level.
The Russia-Ukraine war has added more pressure. Ukrainian drone attacks left about half of Russia's refining capacity offline by late August, according to S&P Global Energy. By September, three of its six largest diesel-producing refineries had halted or reduced output.
The International Energy Agency (IEA) estimates that net exports of diesel / gasoil from the Gulf and Russia fell by 1.6 million bpd between February and August. Those two regions accounted for almost 45% of global seaborne diesel/gasoil trade in February.
This supply shock has translated into higher prices and shortages. European diesel prices have more than doubled from pre-war levels, while US distillate inventories fell to their lowest September level since 1982.
The IEA expects the diesel market to return to surplus in early 2027. However, the additional supply will not be enough to rebuild the inventories depleted in 2026. Diesel markets could therefore remain tight well into 2027, depending on how quickly Gulf supplies recover.
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Why Russian diesel may have limited impact
With US retail fuel prices under pressure ahead of the midterm elections, the administration considered restricting diesel exports to increase domestic availability. But it dropped the idea. It has instead temporarily allowed certain transactions involving Russian diesel. The announced supplies could total around 36 million barrels over the coming months, although not all the volumes are guaranteed to materialise.
That is because Ukrainian attacks have damaged Russian refineries. Also, Russia restricted exports earlier to increase domestic supply. Therefore, the IEA expects this to have little impact on global supplies. Goldman Sachs estimates that the initial shipments could lower wholesale diesel prices in the US and Europe by just $1–$2 per barrel.
India exported approximately 620,000 barrels of diesel per day in September, its highest monthly rate in a year, according to Kpler. Nearly half of it went to Europe. It has around 5.6 million barrels per day of refining capacity. Kpler estimates suggest India's combined exports of diesel, gasoline and jet fuel at around 47 million tonnes in 2025, compared with approximately 25 million tonnes for China.
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Reliance Industries' Jamnagar complex is central to India's diesel-export advantage. The complex can refine 1.4 million barrels per day and process more than 216 grades of crude. Its flexibility to adjust output between diesel and gasoline as margins change is particularly valuable during supply disruptions.
The export-oriented SEZ refinery, deep-water port access and petcoke gasification system further strengthen its position. These capabilities help Reliance respond when global shortages make diesel exports more profitable, although access to crude remains a constraint.
Can India sustain the export surge?
India's large refining capacity gives it the ability to serve markets facing diesel shortages. But sustaining the current export surge will depend on reliable crude supplies, refining margins and competition from other exporters.
A recovery in supplies from the Gulf and Russia could narrow margins, while rising domestic demand could limit exportable volumes. India has the capacity to play a larger role in global refined-fuel trade; the challenge is to remain competitive after the current supply shock eases.
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