Introduction to India's Petroleum Market

India, one of the world's largest consumers of petroleum products, has witnessed a significant shift in its petroleum exports over the past year. Recent data from the Petroleum Planning and Analysis Cell (PPAC) indicates that while the volume of petroleum product exports increased by 3.7% to reach 59 million metric tonnes during the April-February period, the value of these exports declined by about 7% due to lower global prices[2]. This dynamic highlights both the complexity and challenges faced by India's petroleum sector amidst fluctuating global market conditions.

Rising Volume, Falling Value

Volume Growth

• Volume Increase: The 3.7% increase in export volume reflects a strategic shift towards expanding India's presence in the global petroleum market. This growth was primarily driven by higher shipments of motor spirit, petcoke, and fuel oil[2].
• Reasons for Volume Growth: The increase in volume can be attributed to enhanced refining efficiency and strategic marketing efforts by Indian companies. These factors have helped India capitalize on demand for specific petroleum products.

Value Decline

• Value Decline: Despite the increase in volume, the value of petroleum exports fell by 7% to $40.4 billion during the April-February period, compared to $43.4 billion in the previous fiscal year[2]. This decline underscores the impact of reduced global petroleum prices on India's export revenue.
• Impact of Lower Prices: The drop in global crude oil prices from $83.5 per barrel in February 2024 to around $77 per barrel in February 2025 significantly affected the value of exports[4]. This downtrend reflects broader global trends where commodity prices have softened, impacting exporter revenues worldwide.

Challenges in the Petroleum Market

Global Price Volatility

• Price Fluctuations: Global crude oil prices have been volatile, influenced by geopolitical tensions and supply-demand imbalances. This volatility poses a challenge for exporters like India, as it affects both the volume and value of exports[2].
• Supply Chain Disruptions: Recent geopolitical events, including conflicts and the Russia-Ukraine war, have disrupted global energy supply chains. Such disruptions increase freight rates and uncertainty in the market, impacting export profitability[2].

Domestic Demand and Production

• Domestic Consumption: Domestic demand for petroleum products in India grew by 2.6% during the April-February period, driven by increased consumption of diesel, motor spirit, LPG, and ATF[2]. This growing domestic market presents opportunities for local producers but also increases competition for exports.
• Production Levels: India's crude oil production has faced challenges, with a 5.1% decline in February 2025 compared to the previous year. However, refinery operations remained robust, with a 3.4% increase in crude processed by refineries[1].

Export Market Dynamics

• Market Competition: India faces intense competition in the global petroleum market, particularly from countries like the United Arab Emirates and Saudi Arabia. Maintaining export margins requires continuous improvements in refining efficiency and cost competitiveness[2].
• Strategic Opportunities: Despite challenges, India's growing position in the global petroleum market presents strategic opportunities for expansion. Enhanced refining capacities and favorable government policies can help India maintain its competitive edge globally[3].

Export Performance in February

• February Exports: In February 2025, petroleum product exports rose by 6% in volume but fell by 5% in value due to lower prices. This performance reflects the broader trend of volume growth but value decline seen throughout the year[2].

Impact on Indian Economy

Broader Economic Trends

• Merchandise Exports: India's overall merchandise exports are expected to decline slightly to below $435 billion in FY 2025. This contraction reflects broader challenges faced by Indian exporters due to global economic uncertainties[3].
• Petroleum Sector Contribution: The petroleum sector remains a crucial contributor to India's export earnings, despite the challenges. Strategic interventions in this sector could stabilize and boost India's export performance[4].

Policy Interventions

To mitigate the impact of global price volatility and boost export competitiveness, the Indian government might consider targeted policy interventions:

• Export Credit Facilities: Offering low-cost export credits can reduce financial pressure on exporters and enhance their market competitiveness.
• Refining Efficiency Enhancements: Investments in refining technology can improve efficiency and margins, making Indian products more attractive in the global market.

Conclusion

India's petroleum exports face a complex landscape, with volume increases but value declines due to global price dynamics. As the sector navigates these challenges, strategic investments in refining efficiency and targeted policy support will be crucial for maintaining its competitive edge in the global market. Moreover, addressing domestic production challenges and capitalizing on rising demand for select petroleum products can further enhance India's position as a significant player in the international petroleum trade.