Indian and U.S. oil refiners are benefiting from disruptions to global fuel supplies caused by the wars in Iran and Ukraine, as tighter availability and higher prices have increased demand for refined products from alternative suppliers.

With refineries in several affected regions facing attacks, shipping disruptions and reduced availability of crude and refined products, Indian and U.S. refiners have increased exports to markets that previously relied heavily on Middle Eastern and Russian supplies. Analysts and traders expect refiners in both countries to continue benefiting from elevated export margins as long as supply disruptions persist.

India is emerging as a key swing supplier for Asian fuel markets. Rystad Energy said consistently high utilization at export-focused refineries operated by companies such as Reliance and Nayara has allowed India to respond quickly when regional fuel balances tighten.

Global refining throughput declined to around 89 million barrels per day in July, approximately 5 million barrels per day below the level recorded a year earlier, according to the International Energy Agency. With global oil demand above 100 million barrels per day, reduced refining capacity has contributed to tighter refined product markets.

Demand from major importing markets remains resilient. Indonesia, Asia's largest gasoline buyer, is expected to purchase around 11 million to 12 million barrels of gasoline in August, compared with approximately 9 million to 10 million barrels in July. Indonesia primarily imports 88 to 92 octane gasoline from India, Singapore and South Korea.

U.S. refiners are also benefiting from strong international demand. Distillate fuel exports, including diesel and heating oil, reached a record 1.9 million barrels per day in the week ended August 7, according to government data. Jet fuel exports stood at 443,000 barrels per day, close to the record of 455,000 barrels per day reached in May.

Brazil has also increased purchases of U.S. diesel as Russian fuel availability remains constrained. The country imported around 196,000 barrels per day of diesel from the U.S. in July, more than double the June volume, after Russia extended its ban on fuel exports until January 2027.

China remains the main potential competitor to Indian and U.S. refiners in Asian markets. China relaxed restrictions on fuel exports from July, with exports rising sharply to around 1.1 million tonnes in July from approximately 241,000 tonnes in June, according to LSEG Research.

However, strong domestic fuel demand in both India and the U.S. could restrict the volume available for exports. The U.S. is in its peak summer driving season, while India's transportation fuel demand is expected to continue rising over the longer term.

Tighter inventories are adding to the support for refining margins. Wood Mackenzie expects Asian gasoline inventories to remain below the five-year average through the rest of 2026. U.S. gasoline inventories stood at 208.7 million barrels as of August 7, around 6 percent below the five-year seasonal average.

U.S. refiners have also been operating at high utilization rates and prioritizing jet fuel production because of strong aviation fuel demand. Refining margins have risen sharply, with some refined products reportedly fetching significantly more than the cost of the crude used as feedstock.

U.S. refiners, however, face a balancing act between maximizing export margins and meeting domestic fuel demand. Political pressure to contain gasoline prices could lead to calls for restrictions on fuel exports if domestic prices remain elevated.

U.S. diesel margins surged to more than $102 per barrel on August 17, reaching a record level after fresh attacks on refineries in the Middle East and Russia further increased concerns over global refined fuel supplies.

For Indian refiners, sustained disruptions in Middle Eastern and Russian fuel supply could support export opportunities and refining margins. However, increasing domestic fuel consumption and competition from China could limit the extent of the benefit. The outlook for refiners will therefore depend on the duration of geopolitical disruptions, crude availability, regional fuel demand and changes in export flows.