India’s diesel shipments to Southeast Asia climbed to their highest level since October 2018 in March as traders redirected supply and refiners took advantage of stronger Asian margins.
About 1 million metric tons (7.45 million barrels) moved on the route, with roughly half destined for Singapore, according to data from analytics firm Kpler and three trade sources.
Arbitrage swings east as price spreads narrow
Front-month April east-west price spreads narrowed to an average discount of $20 a ton in the week of March 27, based on LSEG pricing data, with some sessions flipping to premiums.
Traders typically view a discount of less than $40 a ton as favourable for redirecting cargoes east of Suez rather than west, supporting the pivot toward Southeast Asia.
The shift followed Middle East supply disruptions linked to the US-Israeli war with Iran, which led some Asian refineries to cut output and prompted countries including China to ban exports of refined products.
Reliance leads shipments with Singapore as the main hub
About 90% of the March volumes were shipped by Reliance Industries, operator of the world’s largest refining complex, Kpler data showed.
Reliance didn’t immediately respond to a request for comment.
The cargoes are expected to help ease supply tightness heading into April.
The export surge could also lift spot-sale margins for Indian refiners that purchased large volumes of prompt Russian crude to replace disrupted Middle East supply.
Buyers seek alternatives amid regional constraints
With typical suppliers constrained, regional buyers turned to India.
“Asian buyers that usually rely on Chinese and northeast Asia must seek alternative supply, with India’s Reliance being one of the main candidates in the region,” analysts at consultancy FGE NexantECA said.
India’s role as a swing supplier — capable of selling refined products to either Europe or Asia, depending on margins — positioned it to fill the gap.
Flows may persist despite policy shifts
Some analysts expect the rerouted flows to continue in the near term, even after the Indian government reinstated export taxes for diesel.
Sparta Commodities analyst James Noel-Beswick said arbitrage calculations suggest “that the trade flow can continue into August at least.”
He added that India “appears firmly committed to keeping its refineries at capacity,” and that Washington’s permissive stance on both Russian and Iranian purchases has given it the means to do so.
The US has issued temporary waivers for the sale of Russian and Iranian oil cargoes at sea to ease global prices.
With Reliance driving volumes and spreads still supportive, flows look set to remain elevated in the coming months, helping to relieve regional tightness while the broader supply backdrop remains unsettled.
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