Wars lift U.S., Indian fuel exports to record 1.9 million bpd

Wars in Iran and Ukraine have turned U.S. and Indian refiners into the world's swing fuel suppliers, with distillate exports hitting a record 1.9 million barrels a day.

Wars in Iran and Ukraine have disrupted global fuel supplies, driving U.S. distillate exports to a record 1.9 million barrels a day and handing Indian and American refiners a windfall at the height of the Northern Hemisphere summer driving season.

"India will continue to act as Asia's swing supplier when regional markets tighten," said Lin Ye, vice president at consultancy Rystad Energy.

U.S. refiners exported distillate fuels, which include diesel and heating oil, at a record 1.9 million bpd in the week ended Aug. 7, government data showed, with jet fuel exports of 443,000 bpd just shy of the 455,000 bpd record hit in May. Global refining throughput fell to about 89 million bpd in July, down 5 million bpd from a year earlier, even as global oil demand tops 100 million bpd, per International Energy Agency figures.

As long as the wars keep Middle Eastern and Russian barrels off the market, Indian and U.S. refiners should keep pocketing billions from higher exports, analysts and traders said — though political pressure on U.S. pump prices could curb the bonanza.

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. Consistently high utilization at export-focused plants such as Reliance and Nayara has enabled India to respond to tightening regional balances, Rystad's Ye said.

Indonesia Imports Hold Near 12 Million Barrels

Imports from Indonesia, Asia's largest gasoline buyer, have remained firm, with August consumption at around 11-12 million barrels versus 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 will average 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. Wood Mackenzie pegs Indonesia's fuel demand at about 690,000 bpd this year because the country's heavily subsidized market was not hit as hard by the crude price shock.

U.S. fuel exporters have focused on capturing European markets that had been major importers of Middle Eastern oil, and nations in Latin America and elsewhere that 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 June volumes, after Moscow extended a ban on fuel exports to January 2027.

Indian and U.S. refiners may face competition only from China, which has historically dominated fuel exports to Asia. China relaxed limits on exports beginning in July, with shipments jumping to 1.1 million tons (9.3 million barrels) from 240,860 tons in June, LSEG Research said. "Other exporters such as South Korea offer limited additional volume growth as uncertainty over crude supply is weighing on refinery runs," Wood Mackenzie said.

Export Curbs Loom Over U.S. Margins

U.S. refiners have prioritized jet fuel over gasoline because of stronger export demand for aviation fuel, keeping gasoline inventories at 208.7 million barrels as of Aug. 7, about 6 percent below the five-year seasonal average. They have also run near maximum capacity almost non-stop since the Iran war began, and some refined products are fetching twice the value of feedstock crude, Gulf Oil analyst Tom Kloza said.

Yet U.S. companies face pressure from President Donald Trump to lower domestic gasoline prices, a political flashpoint for his Republican Party as it campaigns to keep slim congressional majorities in November midterm elections. The EIA this month hiked its 2026 average retail gasoline forecast to $2.91, about 6 percent above its prior estimate yet far below the current pump price of over $4 a gallon. The average U.S. diesel price was $5.47 a gallon as of Tuesday, nearly 50 percent higher than a year earlier, according to motorist association AAA.

"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. U.S. diesel margins, measured against West Texas Intermediate crude futures, hit a record above $102 a barrel on Monday after fresh attacks on refineries in the Middle East and Russia over the past two weeks.

Wood Mackenzie estimates Asian gasoline inventories could stay below the five-year average through the rest of 2026, averaging around 197 million barrels versus about 207 million barrels in the first half. "If supply disruptions in the Middle East persist, inventory levels could fall below our forecast," the consultancy said. For importers, the premium to secure barrels at the height of summer demand is steep, and any U.S. export curb would tighten the market further even as it relieves American consumers.

This article is for informational purposes only and does not constitute investment advice.