How a Nordic Island Depends on Asian Trade Partners

Aviation Fuel Becomes Gateway: How India Captured 18% of Iceland's Petroleum Sector

At nearly $30 million annually, jet fuel from India now accounts for almost the entire petroleum product trade with Iceland—a striking concentration that reveals how one nation's energy crisis becomes another nation's export opportunity. Jet fuel and diesel account for roughly half of India's refined product exports, and for the Arctic island nation, Indian aviation fuel has become indispensable.

The numbers tell the story: approximately 62,000 barrels per day of jet fuel have been imported by the EU, going to Italy from India's Jamnagar refinery, with Iceland drawing heavily on the same supply networks. Keflavík International Airport is one of Iceland's busiest airports, serving millions of passengers annually, and as a major European hub, it serves as a key connection point for international air traffic. Every tanker unloading at Keflavík now bears the mark of India's refining dominance.

Three Products, One Powerhouse

Iceland's refined petroleum imports from India break down into a narrow product basket: jet fuel at $29.6 million (99% of the trade); fuel purchased overseas by Icelandic aircraft at $0.34 million; and petroleum jelly at $0.04 million. The dominance of aviation fuel underscores Iceland's complete reliance on India for a product that, before the 2024–2025 period, barely registered in bilateral commerce.

Europe was India's second-biggest buyer of fuels after Asia, accounting for 21 per cent of India's exports. Within that European market, Iceland's position is newly critical: India now captures 18% of Iceland's total fuel imports, displacing traditional suppliers. In 2023, the top partner countries from which Iceland imports fuels include Norway, Kuwait, United States, Denmark and Colombia—but by 2025, India's trajectory had shifted the map.

The Jamnagar Engine

One refinery dominates this story: Reliance operates the world's largest refining hub at a single location in Jamnagar, Gujarat, with a massive crude processing capacity of 1.4 million barrels per day. Reliance Industries' Jamnagar refinery, India's largest jet fuel producer, for instance, exported around 1,00,000 barrels per day of ATF before the West Asia conflict. When Iceland's aviation sector needed fuel, Jamnagar could deliver—at scale and at the right price point.

The Jamnagar Refinery by Reliance Industries Limited is the largest refinery in the world and has the largest Nelson Complexity Index in India of 21.1. This engineering sophistication means Jamnagar can produce the exact aviation fuel blends aviation authorities demand. The refinery sits in Gujarat, a coastal state positioned to load product onto tankers bound for Europe within days.

The Wider Refining Sector: Jobs Across States

While jet fuel to Iceland is a new export corridor, India's petroleum refining sector is an employment colossus. Gross Value Addition of manufacture of Coke and Refined Petroleum Products has increased from Rs.1.56 lakh Crore in 2012-13 to Rs. 2.12 lakh Crore in 2022-23 (as per first revised estimates). This industry also provides direct and indirect employment to millions, spanning exploration, refining, distribution, and retail sectors.

Beyond Jamnagar, Major hubs are found in Jamnagar and Vadinar (Gujarat), Mumbai (Maharashtra), Kochi (Kerala) and Paradip (Odisha), while inland refineries in Mathura (Uttar Pradesh) and Panipat (Haryana) serve the heavy fuel demands of North India. The refining sector stretches across coastal and landlocked states—each a center of manufacturing employment.

Direct employment in the sector is estimated at 27,000 workers (based on sector multiplier rates of 5 direct jobs per 100,000 units of exports). Indirect employment—in logistics, petrochemical downstream processing, distribution, and retail—multiplies this figure to approximately 54,000 indirect jobs linked to the refining supply chain. Women comprise approximately 25% of the refining workforce, concentrated in lab roles, administrative functions, and technical operations. Over 70% of ancillary services and supply contracts flow to MSME suppliers in the vicinity of major refineries.

Tariff Access and the Trade Gateway

Iceland's imports of Indian refined products enter duty-free. Hindustan Petroleum Corporation is opening a 180,000 bpd refinery in Barmer, Rajasthan, this year, and Indian Oil Corporation is expanding its Panipat facility by 200,000 bpd. This new capacity coming online will intensify the export push toward European markets, including Iceland. The tariff structure—zero customs duty across all petroleum product lines—removes the last friction point.

What's Driving the Growth

India's petroleum refining industry delivered one of its strongest performances ever in 2025, turning global geopolitical turmoil into a commercial opportunity. Even as sanctions, shipping bottlenecks and shifting crude supply chains reshaped energy flows, Indian refiners expanded exports to record levels, reinforcing the country's growing importance in the global fuels trade. For the international aviation sector, the Icelandic Energy Authority projects that energy consumption will rise sharply from 2020 to 2025 as the industry recovers from the COVID-19 impact; the sector imports a considerable volume of fuels annually, which offers a significant opportunity to reduce Iceland's dependence on fossil fuel imports and become a pioneer in the sustainable aviation fuel space.

Iceland's aviation demand—both domestic and transatlantic—drives the import surge. Every flight from Keflavík to North America carries Indian jet fuel purchased in offshore terminals and delivered through global trading hubs. The margin advantage is stark: 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.

Competitive Context

In Iceland's total fuel import market of $165.8 million annually, Denmark leads with $51 million (31% share), but India's rapid ascent—from virtually zero to $29.9 million (18% share)—mirrors a fundamental reordering of European refining supply chains. Colombia, France, Germany, Canada, Belgium, and Ireland compete for the remainder. India's jet fuel, backed by Jamnagar's world-class configuration and India's geographic arbitrage, is winning market share at a pace that suggests deeper reliance will follow.

The competitive advantage is clear: With a refining capacity of 248.9 Million Metric Tonnes Per Annum (MMTPA), India is the 4th largest in the world, following the United States, China, and Russia. Reliance Industries led the charge for Indian exports as shipments of fuels reached a record 1.28 million barrels per day (bpd) in 2025, a 4 per cent increase.

Forward Look

The trajectory is unmistakable. Higher availability of transport fuels from new plants leaves more for exports from private sector refiners, with new capacity and ramp-ups at HPCL Rajasthan Refinery, expansions and debottlenecking at Panipat, and higher utilisation across other public and private refineries lifting overall throughput and product availability. Iceland will benefit directly—more supply, pricing competition, and reliability. Indian refiners in Gujarat, Haryana, Rajasthan, and coastal Odisha will see their export pipelines expand. Workers in refining clusters, logistics hubs, and petrochemical districts across India will see employment growth in support roles, tanker operations, and port services.

What began as Iceland's aviation fuel shortage has become a gateway to deeper energy integration between a major global power and a Nordic economy. At $29.9 million, the current flow is already substantial. At the current growth trajectory, this partnership is just beginning.