India’s base oils output held near multi-year highs in April even as diesel and total oil products output fell to seven-month lows
Combined output and imports exceeded domestic demand for a second time in three months, creating the largest surplus in more than four years
Retail fuel price increases in May continued to lag the surge in crude oil prices, sustaining incentives to maintain base oils output
India’s base oils output held near multi-year highs in April, expanding domestic supply buffers and reducing reliance on overseas markets disrupted by tightening availability and strong diesel margins.
Base oils output came to 152,000 tonnes in April, close to the multi-year high of 153,000 tonnes in March, Ministry of Petroleum and Natural Gas data showed.
Output rose 46% year on year and increased for a fifth straight month, while production in the first four months of 2026 climbed 28% from a year earlier after new capacity started up around end-2025.
Higher domestic output reduced reliance on imports by covering a larger share of domestic demand. Combined output and imports then exceeded domestic demand for a second time in three months, creating the largest surplus in more than four years.
Key Highlights
· Base oils output remained firm even as India’s total oil products output and diesel production fell to seven-month lows in April.
· Base oils' share of total refinery output rose to 0.68% in April, climbing from 0.61% in March and 0.46% a year earlier to the highest in more than a decade.
· Combined output and imports exceeded 400,000 tonnes for a fourth time in five months, while the surplus over demand was the largest in more than four years.
Market Repercussions
India’s April data pointed to refiners maintaining base oils production despite weaker transport fuels output, contrasting with concerns that refiners would prioritise diesel output.
Retail fuel prices in India remained unchanged through April even as crude oil prices surged, limiting the pass-through to domestic diesel prices. Rising lubricants prices by contrast strengthened incentives to maintain higher base oils production.
That incentive extended into May, with a wave of retail fuel price increases still lagging the rise in crude oil.
Base oils also accounted for less than 1% of India’s total oil products output, limiting the benefit of diverting refinery production away from lubricants feedstocks toward diesel.
Higher domestic production also reduced India’s exposure to overseas supply disruptions, with stronger regional run rates helping cushion Asian availability against tighter global markets.