Indian refineries in border states operating normally despite tensions with Pakistan

Indian refineries near the border with Pakistan are operating normally, although New Delhi has stepped up security around them and other key energy infrastructure to prevent any damage in the event of an escalation, according to Indian government sources and refinery analysts on May 9.

The situation along the border remains tense after India launched military operations aimed at "terrorist infrastructure" in Pakistan and Pakistan-occupied Jammu and Kashmir following an attack on tourists last month in India-administered Kashmir. Pakistan has said it would respond to the military operations.

"There is heightened security now around the refineries and ports closer to the border in India. But refinery operations are running normally, and crude cargo discharge operations are going on as per schedule," H.P.S. Ahuja, former CEO at Indian Strategic Petroleum Reserves Ltd., told Platts, part of S&P Global Commodity Insights.

"I don't expect refinery operations to be affected unless there is a full-scale war. As of now, I would say the risk to refinery infrastructure is limited," he added.

Nearly 45% of India's total annual refining capacity of 257 million mt is in the border states of Gujarat, Punjab, and Rajasthan, according to data from Commodity Insights.

Some key ones include Reliance Industries Ltd.'s refinery units at Jamnagar in Gujarat, Nayara Energy's Vadinar refinery in Gujarat and HPCL Mittal Ltd.'s Bathinda refinery in Punjab. In addition, Cairn Oil and Gas, a unit of Vedanta Ltd., also has its Barmer oil fields in Rajasthan.

Several shipping companies and protection & indemnity, or P&I, clubs have issued advisories for ship operators and masters to assess the risks associated with all port calls in India and Pakistan amid rising tensions following recent military exchanges.

"Crude suppliers are keeping an eye on how shipping risk premiums might get affected, but as of now, all crude shipments to India are going on as per schedule and discharge operations at refiners are going on normally," said one senior Indian oil industry source.

Crude runs, port discharge operations

"If this remains a restrained military action, other than some risk premiums and marginal run cuts, there would be limited impact on global crude markets. But if it escalates into a full-fledged war, then it won't remain a bilateral war, depending on allies. That would have a different kind of impact on oil markets," said a former CEO of a leading Indian oil refiner.

Indian refineries processed 23.94 million mt (5.6 million b/d) in March, compared with 23.37 million mt a year ago, oil ministry officials said. The combined run rates of all the refineries in India, state-owned and private, stood at 110% in March, compared with 109% a year ago. April refinery run data has not yet been released by the government.

"IOC has ample fuel stocks across the country and our supply lines are operating smoothly. There is no need for panic-buying -- fuel and LPG are readily available at all our outlets. Help us serve you better by staying calm and avoiding unnecessary rush. This will keep our supply lines running seamlessly and ensure uninterrupted fuel access for all," the state-run refiner said in a statement.

A source at another refiner concurred, adding: "Our throughput levels at very high at the moment. Oil product supplies are ample in the country."

From the beginning of 2025 until May 8, Platts Dated Brent averaged $73/b, down from $81/b in 2024. Looking ahead, Commodity Insights projects global oil liquids demand growth will be only 0.8 million b/d in 2025 -- a sharp cut from the previous round of forecasts, while global supplies remain plentiful. In addition, OPEC+ agreed on May 3 to increase production by 411,000 b/d in June, on top of May production increases.

In the base-case scenario, Platts Dated Brent is expected to moderate $68/b on average for 2025. Furthermore, this trend is expected to continue into 2026, with the average price projected to ease further to $66/b. In the meantime, downward risks loom large if OPEC+ unleashes more volumes of oil to the market.

India's gasoline, gasoil stocks

"The situation remains volatile, and any strong retaliation from Pakistan could escalate tensions further, resulting in negative impact for both nations," said Abhishek Ranjan, South Asia oil research lead at Commodity Insights, adding that India's oil demand would continue to go higher, driven by domestic policies and robust economic growth outlook.

"The fundamentals of the oil market in India remain strong, bolstered by increasing crude runs and consistently growing refined product exports, especially gasoline and jet fuel," he added.

According to Commodity Insights, India's current domestic availability of gasoline and gasoil is projected to be about 12%-14% higher than the five-year average, while the supply days for jet fuel/kerosene are anticipated to be close to the five-year average. Supply days are calculated by dividing average storage levels by daily consumption, showing how many days of demand can be met by current stock levels.

Earlier this week, LR Jain, CEO of Indian Strategic Petroleum Reserves Ltd., told Platts that India's overall oil stock levels were comfortable, as refiners are holding adequate stocks to supplement volumes in strategic reserves, which together can help to keep domestic markets well supplied during geopolitical turbulence.

India's SPRs currently provide reserves of about 9.5 days of net oil imports. State-run oil companies hold storage facilities for crude oil and petroleum products for 64.5 days of total net imports, bringing the current total national storage capacity of crude and petroleum products to 74 days of total net imports.