India and the U.S. Keep the Oil Flowing While Global Supplies Run Low

India and the U.S. Keep the Oil Flowing While Global Supplies Run Low

Srividya Kalyanaraman

Wed, August 19, 2026 at 6:37 PM GMT+3 2 min read

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THE GIST

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The wars in Iran and Ukraine are turning into a money-making opportunity for Indian and U.S. oil refiners as traditional global supply chains get jammed up. These refiners are running near capacity and subbing for Russian and Gulf oil in Asia, Europe and Latin America. In exchange, they're minting billions of dollars in export income.

WHAT HAPPENED

Washington and New Delhi might have their own squabbles over oil, but that's not stopping either from sitting on an export windfall worth billions of dollars, mostly from selling heating oil and diesel.

U.S. refiners exported diesel and heating oil at a record 1.9 million barrels per day in the week ending August 7. Also, jet fuel exports of 443,000 bpd were just below May's record of 455,000 bpd.

Brazil, historically a top buyer of Russian diesel, imported 196,000 bpd of U.S. diesel last month, more than double June's volume, after Moscow extended its fuel-export ban to January 2027, according to Kpler vessel-tracking data.

And India's export-focused refiners, led by Reliance and Nayara, have kept utilization high to fill the gap left by Middle Eastern and Russian suppliers. And analysts say India will keep acting as Asia's swing supplier when regional markets tighten.

Meanwhile, global refining throughput fell to about 89 million bpd in July, down 5 million bpd year-over-year, even as global oil demand held above 100 million bpd.

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WHY IT MATTERS

The U.S. and India have nicely divided the demand between themselves. The profits are landing at a moment of genuine supply strain, not just favorable pricing. But offers are valid only until stocks last: Both U.S. and Asian gasoline inventories are running below their five-year average.

China is the one wildcard competitor. Beijing wanted in on the bonanza and relaxed export limits starting in July; its fuel shipments jumped to 1.1 million tons (roughly 9.3 million barrels) from just 240,860 tons in June. So India won't hog all of the Asian market.

WHAT'S NEXT

There's one major factor that decides how long this run will last: That's gas prices at home. Retail diesel is averaging $5.47 a gallon in the U.S., up nearly 50% year-over-year.

President Trump is pressing refiners to keep domestic prices down ahead of November's midterms. And New Delhi also caps exports to protect its 75-80 days of domestic inventory. So there isn't much wiggle room there.