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(Bloomberg) — India increased levies on exports of oil products to bolster domestic fuel stockpiles while global supplies remained tight despite a pause in fighting between the US and Iran.
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The tax on diesel export has been raised to 24 rupees a liter effective from Aug. 3, from 15.5 rupees in July second half, according to a finance ministry notification on Friday. The government will charge another 1.5 rupees per liter on diesel exports as road and infrastructure levy.
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Tariff on gasoline exports were increased 3.5 rupees from 2.5 rupees and that on jet fuel was lifted to 22 rupees from 14.5 rupees per liter.
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The increase in taxes could restrain exports just as shipments from India, one of Asia’s largest fuel suppliers, are climbing and boosting profits for refiners. July outflows of products, such as diesel and gasoline, are seen about 16% higher from a year earlier.
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Global fuel output tightened as refinery activity fell to its lowest seasonal level in July since the pandemic, according to Goldman Sachs Group Inc. Russia’s ban on diesel exports after Ukrainian attacks on its refineries has stifled global oil products supplies, and lower Indian shipments may worsen the squeeze.
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However, the higher levies will help India build stockpiles as concerns remain over ships transiting through crucial chokepoints in the Middle East, despite US calling off attacks on Iran. President Donald Trump has said talks with the Islamic Republic would begin on Monday.
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Several Indian refineries are also scheduled to undertake maintenance over the next few months, which may crimp supplies further.
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New Delhi reviews the taxes every fortnight based on average international prices for crude oil and refined products during the preceding period. The mechanism allows the government to adjust duties in response to changes in global energy markets while prioritizing local fuel availability.
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India, the world’s fourth-largest refining hub, imports about 90% of its crude oil requirement while exporting large volumes of refined fuels.
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—With assistance from Devidutta Tripathy.
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English (US)