Indian Oil Expands Refining Capacity Amid Rising Fuel Demand and Weak Petrochemical Margins

Key Highlights

• Crude Oil Prices Rise – Brent crude traded at $76.14 (+0.36%), and WTI at $72.56 (+0.33%) amid reports of lower Russian output in January.
• Geopolitical Tensions & Trade Policies – U.S. sanctions on major Russian oil exporters and a 25% tariff on steel and aluminum imports could disrupt global trade.
• Indian Oil’s Expansion Plans – The company is operating Russian crude purchases cautiously, expecting gasoline demand to grow by 6-7% and diesel by 4% in FY26.
• Russian Oil Production Below Quota – January output fell to 8.962 million bpd, missing OPEC+ limits, while U.S. sanctions disrupted shipments to India and China.

Crude Oil Prices Edge Higher Amid Russian Output Concerns

• Crude oil futures traded higher on Tuesday morning as some reports indicated a fall in Russian crude oil output in January.
• At 9.57 am on Tuesday, April Brent oil futures were at $76.14, up by 0.36 percent, and March crude oil futures on WTI (West Texas Intermediate) were at $72.56, up by 0.33 percent.
• February crude oil futures were trading at ₹6310 on Multi Commodity Exchange (MCX)during the initial hour of trading on Tuesday against the previous close of ₹6337, down by 0.43 percent, and March futures were trading at ₹6293 against the previous close of ₹6322, down by 0.46 percent.

Sanctions on Russia and U.S. Tariffs Impact Global Energy & Metals Markets

• Last month, the previous Biden administration in the US had imposed fresh sanctions on Russia. Two of the major Russian oil companies that handle nearly 25 percent of the exports from that country were the main targets of the US sanctions. 
• Meanwhile, the US President Donald Trump, has proposed to cancel the Israel-Hamas ceasefire, if Hamas fails to release the hostages held by it by Saturday. 
• Quoting Trump, a Reuters report said: "As far as I’m concerned, if all of the hostages aren’t returned by Saturday at 12 o’clock, I think it’s an appropriate time. I would say, cancel it and all bets are off, and let hell break out. I’d say they ought to be returned by 12 o’clock on Saturday.” 
• On Monday, he expressed his dissatisfaction with the condition of the last group of hostages freed by Hamas, and on the announcement by Hamas that it would stop further releases of hostages. 
• On Monday, the US government imposed 25 percent tariffs on steel and aluminum imports to help its industries. 
• Speaking to reporters, Trump said: “It’s 25 percent without exceptions or exemptions. That’s all countries, no matter where it comes from, all countries.” It is to be noted here that Canada, Mexico, and Brazil are the largest exporters of steel to the US, followed by South Korea and Vietnam.

Indian Oil Expands Operations, Eyes Gasoline, and Diesel Demand Growth

• Indian Oil is buying Russian crude oil cargoes without the involvement of sanctioned entities and expects gasoline demand to grow 6-7% in the fiscal year 2026, the company's chairman said on Tuesday. Diesel demand will grow 4% in the year to 2026, he said.
• Indian petrochemical margins will remain weak in 2025, Indian Oil Chairman A S Sahney said on the sidelines of India Energy Week in New Delhi.
• The state-run oil giant expects to operate the expanded 500,000 barrels-per-day Panipat refinery by June 2026 and is waiting for approval for construction of the 180,000 bpd Nagapattinam refinery from the oil ministry, Director of Refineries Arvind Kumar said at the industry event.
• It will take 40-50 months to complete construction of the Nagapattinam refinery in the southern state of Tamil Nadu, he added.

Expert Opinion: Russian Oil Production Drop Eases Oversupply Fears

• Russian oil production fell short of its OPEC+ quota in January, easing concerns of an oversupply. Output fell to 8.962 million barrels per day (bpd) and is 16,000 bpd below its approved levels under the production agreement. 
• Shipping of Russian oil to China and India, the world's major crude oil importers, has been significantly disrupted by U.S. sanctions last month targeting tankers, producers, and insurers.