State-owned refiners, such as Indian Oil Corp, Bharat Petroleum Crop and Hindustan Petroleum Corp, used to buy in supplies from private companies to meet demand at the pump.
But a decline in diesel consumption, which accounts for about two-fifths of overall fuel demand, means that Bharat Petroleum Corp will export about 200,000 tonnes of diesel every month between November to March, its head of finance N. Vijayagopal said on Friday.
“We do not expect growth in diesel demand to improve any time soon, at least in this quarter and the next. So if the growth is going to be negative till the end of March 2020, then we will have to export diesel,” Mr Vijayagopal told a news conference.
Moody’s Investors Service lowered India’s ratings outlook to “negative” from “stable” on Friday, warning of lower economic growth.
“Higher diesel exports from India will definitely weigh on Asian margins,” said Senthil Kumaran, oil markets consultant with Singapore-based consultancy FGE, which has cut its forecast for diesel demand in India by a third to 40,000 barrels per day in 2019.
Diesel cracks that had strengthened in anticipation of new marine fuel norms from January 2020 have eased since the start of September.