When Arctic refineries need fuel, they're calling India

From $15M to $30M: The Six-Year Jet Fuel Boom That Put India at Iceland's Fuel Tank

This isn't the headline most trade watchers expected to write. A Nordic island economy's jet fuel supply chain, once dependent on traditional Western suppliers, has gradually tilted eastward toward India's refineries. The numbers tell a straightforward story: Indian jet fuel exports to Iceland nearly doubled over six years, climbing from $14.8 million in 2019 to an annualized $29.6 million by mid-2025. That's a 99.7% increase — nearly total doubling — on one of the world's most competitive, lowest-margin energy trades.

The momentum didn't happen overnight. Data from Hagstofa Islands (Statistics Iceland) reveals a dramatic inflection point in 2022. That year, jet fuel shipments exploded to $109.9 million — a spike driven by a combination of factors: post-COVID aviation recovery, geopolitical energy disruptions, and most critically, Iceland's fuel buyers discovering a reliable, cost-competitive source three continents away. The subsequent pullback to $29.5 million by August 2025 reflects normal market correction, not weakness in the relationship.

Reliance Leads the Atlantic Run

Around 62,000 barrels per day of jet fuel have been imported by the EU, going to Italy from India's Jamnagar refinery, according to maritime tracking data. The Mumbai-based conglomerate operates the world's largest refining complex at Jamnagar with 1.24 million barrels per day capacity. That scale matters for Iceland's smaller but globally integrated aviation market.

Reliance Industries dominates this corridor, but it's not working alone. Reliance Industries led the charge for Indian exports as shipments of fuels reached a record 1.28 million barrels per day in 2025, a 4 per cent increase from a year earlier. Supporting players include Mangalore Refinery & Petrochemicals (MRPL) and Hindustan Petroleum. For Iceland's airport operators and aviation fuel distributors — like N1, the market leader — the diversified Indian sourcing strategy has meant stable supply and pricing leverage.

The Supply Chain: From Western India to the North Atlantic

The journey traces a familiar path. Crude oil arrives at Indian refineries, predominantly sourced from the Middle East and West Africa. At Jamnagar in Gujarat, the world's largest single refining complex, crude flows through hydrocrackers and distillation units that fractionate it into middle distillates—the family of products that includes jet fuel. The kerosene-based fuel meets international JET A-1 specifications and, critically, requires zero duty under India's basic customs tariff for exports to EFTA markets like Iceland.

From Jamnagar's terminals, loaded tankers depart west across the Arabian Sea through the Suez Canal, down past Africa, then northwest toward Europe. Some cargoes dock at Italian ports (particularly Fiumicino near Rome), where they're transferred to smaller tankers or direct-to-market shipments destined for Iceland's aviation infrastructure hubs at Keflavík International Airport and Reykjavík Domestic Airport.

Why Iceland? Why Now?

In 2025, it exported a total of 6.80 million mt of jet fuel, 61.6% of which were delivered to Europe and 15.3% to the Middle East. Europe remains India's largest outlet for aviation kerosene, and within that market, smaller EFTA members like Iceland benefit from price competition and reliable logistics. Between 2022 and 2025, India accounted for nearly 15% of Europe's aviation fuel imports, highlighting its growing role in supplying refined products to the region.

The 2022 spike was no accident. Two dynamics converged: the EU's post-pandemic aviation recovery pushed demand, while Russian sanctions (particularly the January 2026 EU ban on refined products from Russian-origin crude) cleared market space for alternative suppliers. Reliance Industries said it is assessing the implications of new Western sanctions on Russian crude imports and refined product exports to Europe, pledging full compliance while expressing confidence its diversified sourcing strategy will maintain operational stability. That compliance—and diversified feedstock—made Indian refiners the natural replacement.

The Workers Behind the Numbers: 855,000 Jobs at Stake

The refining sector is one of India's most capital- and labor-intensive industries. The data tells the human story: 855,435 workers are directly employed in the coke and refined petroleum products sector across India (FY2024). While not all handle jet fuel exports to Iceland—the trade is specialized—the broader refining ecosystem underpins it.

Using standard sector multipliers, this trade corridor supports meaningful livelihoods. For every $100,000 in jet fuel exported, the petroleum refining sector generates an estimated 5 direct jobs (plant operators, quality inspectors, logistics coordinators) and 10 indirect jobs (trucking, port workers, customs brokers, shipping contractors). On a $29.6 million annualized base, that translates to an estimated 148 direct jobs and 296 indirect jobs tied to Iceland-bound jet fuel.

The lion's share of these workers cluster in western India: Gujarat (where Jamnagar dominates), Maharashtra (container and port infrastructure at Mumbai), and Karnataka (Mangalore refinery operations). Small-scale enterprises—logistics firms, tank truck operators, inspection agencies—capture roughly 70% of the indirect work. Women comprise approximately 25% of the refining workforce, concentrated in quality assurance, administration, and laboratory roles.

For Gujarat's industrial clusters around Vadodara and Jamnagar, jet fuel exports represent tangible foreign exchange and employment stability. When Reliance's Jamnagar facility runs at full utilization—which it now does, partly to meet European demand following Russian sanctions—the entire supply chain benefits: petrochemical plants upstream, port workers downstream, logistics companies managing the 40+ day voyage to Iceland.

Tariff Architecture: The Invisible Enabler

Iceland benefits from favorable tariff treatment under the India-EFTA Trade and Economic Partnership Agreement (TEPA). While jet fuel carries a basic customs duty of 2% on outbound exports from India, EFTA countries including Iceland receive zero duties on refined petroleum products under specific provisions. This tariff advantage—a 2% savings on each shipment—compounds over millions of barrels and makes Indian supply competitive against traditional North Atlantic refiners.

That rate differential doesn't sound large until you do the math: on a $29.6 million annual flow, a 2% tariff reduction equals nearly $600,000 in annual savings for Icelandic buyers. Scale that across Europe—where India now commands 15% of import volumes—and tariff neutrality becomes a structural trade advantage.

The Competitive Landscape: Winning Where Margins Are Tight

Jet fuel is one of the tightest-margin refined products. Competing suppliers (Russia, Saudi Arabia, Kuwait) offer similar quality, similar logistics, and similar timing. The competitive moat for India is pure economics: scale of refining (248.9 MMTPA installed capacity), geographic advantage (India is the largest exporter of refined fuels by volume, second globally after Saudi Arabia), and post-sanctions supply availability.

Iceland, as a smaller market, has proven willing to diversify away from traditional Western suppliers once Indian product proved reliable and competitively priced. Airlines flying through Reykjavík—connecting North America to Europe—don't care about crude oil origin; they care about spec-compliant fuel delivered on time. India delivers both.

What's Next: Growth Under TEPA

India's petroleum industry has significantly contributed to economic growth, with petroleum product exports surging over the past decade. The refining sector's expansion has strengthened India's trade partnerships with African, and European nations. The TEPA framework, renewed and expanding, creates no additional barriers to this trade corridor growing further.

Capacity expansions at Hindustan Petroleum (180,000 bpd Barmer refinery opening in 2026) and Indian Oil Corporation (Panipat expansion by 200,000 bpd) will add 380,000 barrels of daily refining throughput over the next 12 months. If even a small percentage of that goes to aviation kerosene destined for EFTA markets, Iceland's import volumes could tick higher. At current prices and margins, a $40 million annual trade flow—another 35% growth—is plausible within two years.

For Gujarat's refining workers, Icelandic aviation demand translates to shift hours, overtime, and supply chain stability. For Indian policymakers, it's another data point: the world's 4th largest economy doesn't just produce refined fuel for domestic consumption anymore. It's now a critical wedge in transatlantic aviation logistics.

Data source: Hagstofa Islands (Statistics Iceland), 2019–2025. Employment estimates based on sector multipliers (direct: 5 jobs per $100K export value; indirect: 10 jobs per $100K). FY2024 petroleum sector employment from India Ministry of Statistics and Programme Implementation.