India’s Refineries Push Past 100% Capacity as Diesel Demand Explodes

For the last half‑year India’s oil‑processing plants have been humming at an almost unbelievable pace – somewhere between 105 % and 108 % of their design capacity. It sounds like a statistic you’d read in a trade journal, but the reality is that every barrel is being squeezed out to meet a diesel rush that shows no sign of easing.

At the recent APPEC petroleum conference in Singapore, Nandakumar Pillai, a senior director at Mangalore Refinery and Petrochemicals Limited (MRPL), explained that most Indian refiners are “complex” – they can handle a wide variety of crude, anywhere from an API of 16 up to the high‑40s. That flexibility, he said, is the key reason the plants can stretch beyond 100 % utilisation without tripping off alarms.

MRPL’s own complex, sitting on the Karnataka coast, is a 300,000 bpd facility that was built with secondary processing units designed for exactly this kind of adaptability. Pillai told Reuters the refinery will stay above the 100 % mark at least until March 2027, a decision driven largely by the roaring domestic diesel appetite.

Across the country, refiners have been deliberately steering feedstock toward diesel output, even if that means cutting back on jet‑fuel production. The trade‑off makes sense: diesel prices have surged globally, and the so‑called “diesel crack” – the margin between crude and the finished fuel – has climbed to record highs.

The backdrop to this scramble is a confluence of geopolitical pressures. Ongoing conflict in the Middle East, a Russian ban on diesel exports and the lingering fallout from Ukraine’s drone attacks on Russian refineries have all choked off supply. Even though refineries elsewhere are running flat‑out, they can’t fully compensate for the loss of Middle‑Eastern and Russian middle‑distillate volumes.

Analysts have been warning for weeks that diesel, not crude, is the real stress test for the energy market. And the numbers are confirming that worry – every time a new wave of tension spikes, the diesel crack jumps higher.

So while the headline numbers look impressive – refineries cranking at more than full throttle – the story underneath is one of tight markets, shifting priorities, and a fuel that has become the new barometer for global energy health.