What a barrel of diesel costs India

The previous article showed that diesel use barely falls when its price rises. So when diesel's availability comes down, its price has to rise a long way before demand eventually comes down.

In September 2026, diesel at the Gulf averaged $164.45 a barrel and the Indian crude basket $116.09. Both prices are, before any shipping, so the $48.4 gap is the price of the diesel itself, not the cost of transport. The gap has been considerably higher throughout the year. $73 in April, $43 in May, $37 in June, $54 in July, $59 in August and $48 in September.

Diesel cost per barrel

India refining Gulf crude pays for the crude itself, then freight to India, then war risk insurance and the cost of running its refineries. Altogether it is about $130 a barrel. With Russian crude it is about $132. The crude is slightly cheaper, but the journey takes longer. An Asian country with no refinery buys Gulf diesel instead and pays about $177.

Shipping is costed the same way for both Gulf cases: the same voyage length, each ship's freight earnings from the Baltic Exchange, fuel and port costs, and the same Hormuz insurance rate. It comes to about $10 a barrel for India's crude and $11 for the importer's diesel, which travels in smaller tankers. Almost all of the $47 difference is the price of the diesel.

What India saves

India's refineries make about 116 million tonnes of diesel a year, more than what is used, as the first article showed. Out of which, 85% is used at home and 15% is exported. On each barrel consumed locally, India pays about $47 less than an importer directly taking diesel would. Over a year, that comes to about $36 billion.

The exports and the tax

At September prices, India's diesel exports were worth about $22 billion a year. The margin over India's own cost was about $34 a barrel. From 16th September the government charged an export tax worth about $33 a barrel. From 1st October, the tax fell to about $27 a barrel.

Shipping and insurance

Moving oil costs far more than a year ago. Supertanker rates from the Gulf to China are 11.6 times last year's cost. War risk insurance for a Hormuz transit costs 3–10% of a ship's value, against about 0.25% before the war. India paid 48% more for the same amount of crude in April to August than a year earlier.

Sources and notes

Crude and diesel prices: PPAC, international prices of crude oil (Indian basket) and diesel (10 ppm Arab Gulf gasoil), monthly averages. Freight: Baltic Exchange weekly tanker reports for 26 September 2025 and 25 September 2026. War-risk insurance: Marsh and S&P Global rates as reported by Al Jazeera. Russian crude freight: MarineLink; Urals discounts: Business Recorder. Diesel production, use and exports: PPAC, Oil and Gas Snapshot of States and import/export data, April to June 2026. Export tax: notifications reported by TaxGuru, converted to dollars at the September 2026 average rate (FRED).

Freight, insurance, refining cost and the supplier premium are estimates built from the published figures above; the sources table marks each one and states its assumptions. Prices exclude taxes, distribution and retail margins.