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Output rose to a record high in March, but a structural supply deficit persisted
India’s import reliance remained elevated even as the supply gap narrowed
Refinery economics pointed to limits on further output gains, adding to import dependence
India’s base oils output rose to a record high in March following recent capacity additions, but supply still fell well short of demand, leaving the country structurally reliant on imports.
Total output rose to 153,000 tonnes in March, up from 134,000 tonnes in February and 21% higher year on year, Ministry of Petroleum and Natural Gas data showed.
Output rose for a fourth straight month following the start-up of new production capacity at end-2025.
The planned start-up of additional capacity over the coming years would extend that trend, helping meet rising lubricants consumption and limiting reliance on imported base oils.
Supply disruptions since end-February pointed to the ongoing risks from India’s reliance on imports to meet most of its lubricants feedstock requirements.
Key Highlights
· First-quarter output rose to 428,000 tonnes, climbing 22% year on year to a record high.
· Output outpaced the 5% rise in India’s base oils and lubricants demand during the same period.
· The shortfall between output and demand fell to less than 840,000 tonnes in the first quarter, from more than 920,000 tonnes during the previous quarter.
· The shortfall still held at more than 820,000 tonnes for a fifth straight quarter, up from less than 640,000 tonnes/quarter during the previous two years.
· Output accounted for more than 33% of demand in the first quarter, rising from 27% during the previous quarter to the highest since end-2023.
· The share was similar to the 33% level recorded during the three years to end-2024.
Market Repercussions
India’s relatively steady output share of total demand highlighted the need for additional capacity to avoid increasing reliance on imports.
It also pointed to the difficulty of reducing that dependence amid steadily rising demand.
Refiners’ competing priorities in the coming months could compound that challenge.
Even with recent capacity additions, base oils output faced downward pressure as refiners prioritised motor fuel production to maintain domestic supply.
Any such move would further tighten domestic availability and increase dependence on imports at a time when global availability had tightened and prices had surged.
