India's Q1 crude runs set to receive a boost from diverse feedstock inflows

Indian refiners lifted crude run rates in the first quarter of 2025, driven by higher margins, increased feedstock availability from new and non-OPEC suppliers and strong domestic demand. However, uncertainties surrounding trade policies and impending tariffs could impact feedstock availability in the second quarter, potentially limiting run rates.

Analysts and trade sources told Platts, part of S&P Global Commodity Insights, that while some scheduled maintenance could also affect runs, a robust domestic consumption outlook would prevent them from falling sharply.

"Indian refineries have demonstrated robust performance in Q1 2025, with crude throughput projected to be about 240,000 b/d higher compared with the same quarter last year," said Abhishek Ranjan, South Asia oil research lead at Commodity Insights. "A slight increase in refining margins has contributed to elevated crude runs in February, supported by spot purchases from non-traditional suppliers."

However, crude throughput is anticipated to decline in the second quarter, influenced by seasonal factors and uncertainties stemming from US trade policies, Ranjan said. "Additionally, scheduled maintenance at one of the country's largest refineries is expected to further impact India's overall refinery intake in the upcoming quarter."

Reliance's Jamnagar refinery, which has an overall capacity of 1.36 million b/d, is currently undergoing partial works involving its coker unit, according to market sources. The maintenance started in late February and is expected to last until mid-April. Reliance declined to comment on the matter.

Feb trend to continue in March

The expectation that overall Q1 crude runs will remain high is based on the fact that March runs are anticipated to stay at levels similar to those in February.

India's refineries processed 5.65 million b/d of crude in February, rising 7% year over year, according to the oil ministry. The combined runs of all types of refineries, including state-run and private, exceeded February's target by 3.7%.

February's combined runs were 0.7% higher than the 5.61 million b/d processed in January, as state-run refiners such as Indian Oil Corp., Bharat Petroleum Corp. Ltd. and Hindustan Petroleum Corp. Ltd. processed nearly 4% more throughput than their monthly targets.

Analysts said the expectation of higher throughput levels in the first quarter compared with the October-December quarter is also due to state refiners ramping up output to meet their financial year production targets. The January-March quarter marks the final quarter of the 2024-25 (April-March) fiscal year.

"Indian refiners have been running hard at peak utilization levels through Q1 2025," said Tushar Bansal, senior director at consulting agency Alvarez and Marsal. "The crude sources have been opportunistically diversified with a view to maximizing margins."

Industry sources said India's imports of Russian crude are expected to remain strong, keeping runs at relatively high levels.

"Indian oil imports from Russia showed signs of improvement in March as the nature of US sanctions on Russian oil trade became clear, setting aside initial apprehension about the imposed new sanctions for oil imports from Russia," said an Indian oil ministry source.

Robust domestic outlook

India's oil product demand increased 3.3% month over month in February, aided by stronger manufacturing activity. However, demand fell 2.1% year over year due to higher crude prices from new sanctions on Russian oil trade imposed in January, according to government data and trade sources.

"India's demand for oil products is expected to get some traction in the second quarter from improvement in economic growth," said a petroleum ministry source. "It will also find support from the manufacturing sector, increased mobility and favorable weather outlook."

S&P Global Ratings indicates that while the highly uncertain macroeconomic environment poses risks to the global economy in 2025, more domestically oriented economies like India and Japan could be relatively insulated from external conditions.

India's domestic oil products demand is expected to see modest 67,000 b/d year-over-year growth in the first quarter, despite typically sluggish naphtha demand during this time of year and lower consumption of other minor products, according to Commodity Insights. However, the higher demand for the three main transportation fuels -- gasoline, diesel and CNG -- and LPG during the winter season and travel activities for the Maha Kumbh gathering bolstered consumption.

"India's oil demand is projected to grow by 165,000 b/d year over year in Q2 2025, driven by strong diesel and gasoline consumption," said Himi Srivastava, principal oil research analyst for South Asia at Commodity Insights.

"As summer approaches, demand typically rises due to increased agricultural and construction activities, supporting diesel demand, which is expected to rise by 85,000 b/d year over year in Q2 2025," Srivastava said. "Meanwhile, gasoline consumption is anticipated to grow by 56,000 b/d, fueled by the increased use of private cars as temperatures rise and air conditioner usage increases."

Additionally, the summer break at schools increases driving activity as families go on vacations. With the rise in leisure activities and travel demand, there is also an expected uptick in scheduled flight departures, leading to strong sales of jet/kerosene, according to Commodity Insights.