The imposition of windfall tax coupled with re-prioritisation of refinery operations to increase LPG output and refinery maintenance pulled down India’s refined petroleum product exports to their lowest levels since October 2022.

May 2026 is also the third consecutive month of decline in exports of petroleum, oil and lubricants (POL) products, which comes after the government re-imposed Special Additional Excise Duty (SAED) on diesel and aviation turbine fuel (ATF) to discourage outbound shipments in March 2026.

The prices of two commodities have been surging in the global market due to the conflict. The windfall tax also came after India’s crude oil inventory levels declined, slipping below 100 million barrels in March itself.

Kpler said that India’s refined product exports fell to around 930,000 barrels per day (b/d) in May 2026, which is the lowest export level recorded since October 2022 (926,000 b/d).

“This sharp retrenchment was driven by a combination of lower refinery throughput, maintenance activity, and a structural pivot toward the domestic market,” the real-time data and analytics provider added.

Sumit Ritolia, Kpler’s Lead Research Analyst for Refining & Modelling, told businessline, “State-owned refiners have increasingly prioritised domestic market requirements amid continued uncertainty in global energy markets. Concerns around supply security and the mandate to maintain adequate local availability encouraged PSU refiners to direct a larger share of production toward the domestic grid rather than international export channels.”

Besides, he explained that export economics have become less supportive for incremental overseas shipments, as domestic taxes on refined product exports continue to reduce the attractiveness of international sales relative to local supply.

Ritolia also pointed out that the planned maintenance at Reliance Industries Ltd’s (RIL) Jamnagar complex significantly reduced export availability during May.

“As India’s largest refiner and refined product exporter, Reliance plays a disproportionate role in determining national export volumes. The maintenance turnaround lowered crude intake and refinery throughput,” he added.

Beyond maintenance-related run cuts, Ritolia pointed out that refiners actively adjusted product yields to prioritise domestically required fuels, particularly liquefied petroleum gas (LPG), and this has led to lower production (80,000 b/d in total) of gasoline and gasoil. Shifting refinery configurations to maximise local LPG output directly reduced the availability of export barrels, with gasoline and gasoil exports bearing the largest impact.

India’s crude oil imports last month surpassed 5 million barrels per day (mb/d), the highest since the West Asian conflict re-ignited on February 28, 2026. This is against an average import of 4.84 mb/d per month in calendar year 2025.

The world’s third largest consumer and fourth largest refiner added cargoes to replenish its depleted onshore crude inventories, which slipped from 107 million barrels (mb) in February 2026 to 95 mb a month later and further to 91 mb in April as refiners drew down inventories amid uncertainty over supplies and shipping through the Strait of Hormuz. In May 2026, the onshore crude inventories rose by 5 mb to 96 mb.

Published on June 3, 2026