India Raises Export Tax on Diesel and Jet Fuel
India has increased the export taxes on diesel and jet fuel for a two-week period starting July 16, 2026, amid renewed tensions in the Strait of Hormuz that could further tighten the global fuel market.
The country’s Finance Ministry announced that the levy on diesel exports has been raised to 15.50 rupees ($0.16) per liter from 8.5 rupees, while the export tax on jet fuel has nearly doubled to 14.5 rupees per liter, up from 7.5 rupees during the first half of July. Conversely, the export duty on gasoline has been reduced from 4 rupees to 2.5 rupees per liter.
This adjustment reflects India’s routine biweekly review of export duties, which takes into account current domestic and international market conditions, including fuel supply and pricing.
Despite the nearly doubled taxes on diesel and aviation fuel exports, the current levies remain far below the peaks seen during the early weeks of the Iran conflict when export taxes surged to three to four times the present levels. Those earlier increases coincided with spiking crude oil prices and heightened competition among Asian countries for crude oil supplies that bypassed the Strait of Hormuz.
Analysts warn that the elevated export duties may reduce India’s fuel exports, potentially affecting the already tight international fuel markets. Diesel stocks, in particular, remain strained due to Russia’s export ban triggered by Ukraine’s ongoing drone attacks on Russian refining infrastructure, which have lasted several months.
Ole Hansen, Head of Commodity Strategy at Saxo Bank, highlighted the refined products market as the focal point of current energy stress, indicating that diesel, gasoil, and jet fuel continue to trade at significant premiums owing to low inventories, refinery disruptions, and peak seasonal demand.
The tax hikes come as geopolitical risks in the Middle East contribute to volatility and potential supply disruptions, prompting countries like India to adjust export policies aimed at balancing domestic needs with international market dynamics.
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