In January 2024, India experienced a significant decrease in its petroleum product exports to Europe, reaching an 18-month low. This decline was primarily due to security concerns in the Red Sea region, leading tankers to avoid the Suez Canal route. Notably, diesel exports to Europe, which had peaked at over 287,000 barrels per day (bpd) in December 2023, drastically fell to approximately 40,000 bpd in January 2024, contributing to an overall decrease of nearly 70% in petroleum product exports to Europe compared to the previous month’s figures. The total petroleum product exports of the country in January also declined by almost 18% from December levels, amounting to 1.11 million bpd. These trends suggest a significant impact on India’s export volumes due to the redirection of shipping routes away from the Red Sea.

Shift in Shipping Routes and Geopolitical Implications

The security challenges in the Red Sea region have prompted major shipping companies to opt for the longer route around Africa via the Cape of Good Hope, leading to a notable extension of voyage times by 15-20 days. This shift has been exacerbated by the geopolitical crisis following Russia’s invasion of Ukraine in February 2022. Following this event, Europe began reducing its reliance on Russian energy imports, turning to India as a major supplier of petroleum products. Despite these challenges, India continues to be a significant player in the global petroleum market. As the world’s third-largest consumer of crude oil, India relies on imports to meet over 85% of its domestic demand. However, its substantial refining capacity of around 5 million bpd allows it to maintain its status as a net exporter of petroleum products, contributing to its resilience in the face of shifting global trade patterns.

Source: The Indian Express

Tags: Red Sea crisis, India, petroleum exports, Europe, trade disruption, Suez Canal, security concerns, energy supply, shipping routes, geopolitical implications