India’s Q3 refinery cut may disrupt global oil flows as the monsoon season reduces demand for fuel and travel. The upcoming months should see a decline in refinery run rates, which in May averaged 106%. However, analysts and industry sources believe the decline will be temporary. The demand for exports and vacation travel is expected to cause another spike in utilization in Q4.
In addition, Indian refineries were processing more than 5.49 million barrels a day as of early 2025. Due to the strong support of private companies like Reliance, BPCL, and IOC, it is now feasible. India’s refining industry has remained relevant globally despite recent geopolitical tensions that have not impacted crude imports or oil refining.
Refining Cut Looms as Monsoon Dampens Fuel Demand
India’s coming refinery cut is mostly seasonal, as fuel demand generally declines across all sectors during the monsoon season. There is less demand for gasoline and diesel because travel and product movements are slow. As a result, refinery runs might fall short of the high levels seen in H1 during July and August.
However, despite this, India had a strong first half of 2025. Refineries ran at over 100% capacity, with IOC’s Panipat and Paradip units and HPCL’s Vizag unit leading the way. BPCL ran at 117% only in May. Additionally, stable crude imports and a lack of significant shutdowns contributed to the high H1 figures.
However, private refiners have begun to modify their runs. Reliance and Nayara reported lower April-May utilization compared to 2024. This could be an early reaction to lower margins and expected seasonal changes in demand. This trend might continue into Q3 in the larger oil refining ecosystem.
India Eyes Recovery in Q4 with Strong Export Push
The industry expects a speedy recovery even though the Q3 refining cut may appear substantial. It is anticipated that Q4 fuel demand will increase due to the start of the holiday season and increased transportation activity. Additionally, India’s oil product exports increased 7% yearly in May, primarily to the EU, giving optimism for further growth.
Moreover, imports of crude have held up well. India imported 5 million b/d in May, despite the disruptions brought on by the conflict between India and Pakistan. Crude imports increased 1.5% year over year from January to May. By diversifying its supply, especially from the US and Russia, India’s oil refining sector has also become more stable.
Will Q4 Offset India’s Seasonal Refining Cut?
India may restrict regional fuel supplies as a result of its Q3 refinery cut, which could affect oil prices globally. Strong fuel demand, steady oil refining, and robust crude imports all contributed to the nation’s Q4 recovery.
Refinement trends in India have an impact on the entire world. Additionally, a slowdown in Q3 might result in fewer exports, which would raise prices in countries that import fuel. Higher runs and outgoing shipments in Q4 could bring the market back into balance. Either way, India’s seasonal fluctuations will most likely affect the price of crude oil around the globe.
About The Author
