Jet Fuel Exports Pivot: India Takes Second Spot in Iceland's Mineral Fuels Market

$29.9 million in petroleum products now flow annually from Indian refineries to Icelandic airports and aviation hubs—a striking repositioning that places India as the second-largest supplier to the Nordic island, just behind Denmark's regional dominance. The mineral fuels sector represents the largest export category between the two nations under the newly operational Trade and Economic Partnership Agreement (TEPA), with jet fuel alone accounting for 98.7% of the volume.

The Trade and Economic Partnership Agreement (TEPA) between India and the EFTA states entered into force on 1 October 2025, creating a structural tailwind for Indian refiners seeking European customers. What makes this particular trade flow significant is not just its size—$29.6 million in aviation turbine fuel shipments—but its competitive logic: Iceland's aviation sector, anchored by carriers like Icelandair operating hub routes between Europe and North America, requires reliable year-round fuel supplies that traditional Nordic sources struggled to meet consistently.

The Jet Fuel Sector Takes Off

The mineral oils chapter encompasses three distinct products flowing to Iceland: jet fuel dominates at $29.56 million, followed by a specialized variant for aircraft fueling at $336,030, and petroleum jelly at $40,889. But the story lives in jet fuel because around 62,000 barrels per day of jet fuel are being imported by the EU, going to Italy from India's Jamnagar refinery. That same export architecture now feeds Iceland's market.

India ranks second in the world for exports of refined petroleum products, a standing amplified by exports totaling 6.80 million tonnes of jet fuel in 2025, with 61.6% delivered to Europe. Iceland represents a niche but strategically important slice of this European corridor.

Competitive pressure is real. In 2023, the top partner countries from which Iceland imports fuels include Norway, Kuwait, United States, Denmark and Colombia. Yet India has claimed the second-largest share within the overall mineral fuels market—a position that reflects both refinery capacity and geopolitical access. The rebound in Indian shipments to Europe has been led by Reliance, with exports of diesel, jet fuel and gasoline to Europe reaching 229,000 barrels per day, the highest since November 2025.

From Coastal Clusters to Arctic Aviation Hubs

The largest oil refinery in India is the Jamnagar refinery complex in Gujarat, operated by Reliance Industries Limited, and is also the largest refining hub in the world, with a processing capacity of 1.4 million barrels per day. This single facility generates the bulk of India's jet fuel exports to Iceland. Support comes from Nayara Energy, which operates the Vadinar refinery in Gujarat with a capacity of 20 million tonnes per annum and handles a variety of crude types from across the globe. Both refineries sit along Gujarat's coast, optimized for crude imports and finished product exports.

The supply chain is lean: crude arrives by tanker, processes through India's most sophisticated refining infrastructure—many Indian refineries rank among the most complex in the world, with high refining complexity that allows them to process a wide range of crude grades—and ships directly to Iceland's fuel depots. No intermediate warehousing. No agent markup. This efficiency explains India's competitive advantage against traditional suppliers.

Why Iceland Needs Indian Jet Fuel

Iceland's aviation system creates a permanent demand signal. The import trend for aviation fuel in Iceland saw a gradual increase over the past five years, driven by the growing demand from the aviation industry. Icelandair and regional carriers operate hub routes that move passengers between North America and Europe, requiring substantial fuel reserves that small Nordic producers cannot supply. Airlines flying to and from Iceland receive a 100% reimbursement of the price difference between sustainable aviation fuel and fossil fuel at airports in Iceland, creating infrastructure incentives for alternative fuels—but not yet replacing the conventional jet fuel market that Indian refineries serve.

The TEPA Tariff Window

Under TEPA, EFTA has offered zero or reduced tariffs on more than 95% of India's exports, including a wide range of chemical products, with EFTA offering 92.2% of tariff lines encompassing 99.6% of India's exports. For mineral fuels, this translates to tariff elimination that makes Indian jet fuel price-competitive even when Nordic or North American alternatives exist. The agreement removes friction from India's export machinery precisely when global refining margins remain elevated.

Jobs and Livelihoods Across Gujarat's Energy Corridor

The mineral fuels sector's expansion depends on employment across India's refining hubs. Refineries contribute to approximately 3% of India's GDP and are a major source of export revenue, supporting thousands of jobs and ensuring energy security for the transport and industrial sectors. The Jamnagar complex alone hosts tens of thousands of direct workers—engineers, operators, technicians, and logistics staff—plus an estimated indirect employment base spanning port workers, truck drivers, equipment manufacturers, and maintenance contractors.

Using the sector employment multiplier provided (5 direct jobs and 10 indirect jobs per 100,000 units of export value), the $29.9 million flow to Iceland supports an estimated 15 direct and 30 indirect jobs within the refining supply chain serving Nordic markets. Women's representation in India's petroleum sector stands at approximately 25%, though concentrated in administrative and technical roles rather than plant operations. Major hubs are found in Jamnagar and Vadinar (Gujarat), Mumbai (Maharashtra), Kochi (Kerala) and Paradip (Odisha)—a geographic footprint that distributes petroleum sector wages across multiple states and reduces regional concentration risk.

Small and medium enterprises capture 70% of the indirect employment—truck transporters, equipment suppliers, storage operators, and port logistics firms. These businesses multiply the initial refinery payroll into broader community income in Jamnagar district, Vadodara region, and surrounding industrial towns where petroleum supply chains operate.

Forward Trajectory: Capacity and Demand Align

India's installed refining capacity is expected to reach 290 million tonnes during the December 2026-March 2027 period, with throughput potentially rising to 310 million tonnes. This expansion frees capacity at private refiners like Reliance for high-margin exports. Overall exports of premium clean products—diesel, jet fuel and gasoline—from India surged to 1.37 million barrels per day last month, the highest since September 2025, signaling accelerating export volumes available for Nordic and other European customers.

Iceland's long-term energy demand remains secular and inelastic. Aviation growth, Arctic tourism expansion, and heating fuel consumption provide structural tailwinds for Indian refinery exports. TEPA removes tariff barriers precisely when refining margins remain attractive and global crude supplies diversify away from Russian sources—the strategic opening India needed to cement its Nordic footprint.

"The transition to sustainable aviation fuel will only happen if production is scaled up and competitive pricing ensured."

This quote underscores the longer-term play: while Iceland transitions toward sustainable fuels, conventional jet fuel remains the operational reality. Indian refiners, positioned with capacity, tariff access, and proven logistics to Nordic markets, capture margin-rich volume today while sustainable fuel infrastructure builds over the next decade.