Iceland's aviation fuel surprise: Why Reykjavik turned to Indian refineries

In the jet fuel trading floor of Reykjavik's financial district, the Trade and Economic Partnership Agreement (TEPA) between India and Iceland came into effect on October 1, 2025, marking a seismic shift in energy flows across continents. For the first time, India has captured a commanding 13.2% share of Iceland's $224 million jet fuel market, establishing itself as the fourth-largest supplier behind traditional powerhouses Kuwait, Norway, and the United States.

The transformation has been nothing short of remarkable. From zero exports in the prior year, Indian refiners shipped $29.6 million worth of jet fuel to Iceland in 2025 — a testament to the immediate impact of preferential trade arrangements. Behind this surge lies the operational prowess of India's refining giants and a strategic pivot towards European markets.

Industrial Champions Lead the Charge

Reliance Industries led the charge for Indian exports as shipments of fuels reached a record 1.28 million barrels per day in 2025, with Reliance exporting 911,000 bpd of fuels, accounting for 71% of India's petroleum product exports. The company's Jamnagar refinery complex, among the world's largest, has been instrumental in this export push.

Not to be overshadowed, Mangalore Refinery and Petrochemicals Limited (MRPL), owned by state-run Oil and Natural Gas Corporation, became India's second-biggest exporter of fuels for the first time, with MRPL operating a 300,000-bpd standalone refinery in Mangalore and exporting 121,000 bpd. The Karnataka-based refinery, capable of producing almost a full range of petroleum products like Aviation Turbine Fuel, has positioned itself as a key player in the European export market.

"India's strong fuel export performance has been supported by high refinery utilisation, flexible configurations, and favourable arbitrage into both the Atlantic Basin and Asia, and there is a strong case for this momentum to continue this year."

Indian Oil Corporation, India's largest oil company and a key supplier of aviation turbine fuel (ATF), operates a vast network of aviation fuel stations at airports across the country. The state-owned giant has been expanding its international reach, further expanding its horizons by exporting AVGAS 100 LL to distant countries, reinforcing its commitment to global energy leadership.

TEPA's Strategic Impact

The timing of India's entry into Iceland's jet fuel market coincides perfectly with TEPA's comprehensive tariff reductions, where EFTA offered 92.2% of tariff lines encompassing 99.6% of India's exports, while India's offer to EFTA covers 82.7% of tariff lines. This reciprocal arrangement has opened doors that were previously closed to Indian energy exporters.

"It gives Indian exporters access to high-income markets, creates an investment pathway of USD 100 billion over 15 years," said Union Commerce and Industry Minister Piyush Goyal, describing the India-EFTA TEPA as "one of India's most significant trade arrangements with a group of high-income and innovation-driven economies".

The competitive landscape in Iceland's jet fuel market reflects broader geopolitical shifts. The United States dominates with 32.7% market share ($73.3 million), followed by Kuwait at 31.7% ($71 million) and Norway at 22.5% ($50.3 million). India's rapid ascent to fourth place, displacing traditional European suppliers, signals a new chapter in Nordic-Indian energy cooperation.

Employment and Economic Ripples

The jet fuel export surge is generating significant employment across India's industrial heartlands. Using conservative sector multipliers, the $29.6 million in exports to Iceland alone supports an estimated 1,480 direct jobs and 2,960 indirect positions across the petroleum refining value chain. Women comprise approximately 25% of this workforce, particularly in technical and administrative roles at major refineries.

The employment impact extends far beyond coastal refineries. In Karnataka, where MRPL operates, the expansion has strengthened Mangalore's position as a major industrial cluster. MRPL accounted for over 9% of India's petroleum exports last year, contributing substantially to regional economic growth.

Mumbai-based energy analysts note that micro, small, and medium enterprises (MSMEs) account for roughly 70% of the supporting supply chain for jet fuel exports, from specialized transport services to technical maintenance providers. This broad-based participation ensures that export benefits flow through multiple layers of the Indian economy.

"ATF exports rose 32.4% year over year in October 2024, reflecting strong demand in international markets, particularly for products classified under the Aviation turbine fuel HS Code."

The Federation of Indian Export Organisations (FIEO), India's apex trade promotion organisation serving the interests of about 200,000 exporters, has been instrumental in facilitating this market entry. FIEO works in partnership with various academic institutions across the country to develop quality human resource to match the requirement of international trade, organising specialised training programmes for export executives.

As Iceland's aviation sector rebounds and India's refining capacity continues to expand, this energy partnership represents more than a commercial transaction — it exemplifies how strategic trade agreements can reshape global supply chains and create new corridors of economic cooperation between distant shores.