Govt Admits E20 Reduces Mileage, Ethanol Surplus Spurs Export Push Amid E20 Backlash

Amid a huge backlash over E20 rollout and its impact on vehicles and their mileage, the government admitted that E20 blended fuel could result in a 3-5% reduction in the fuel economy of “some vehicles”. Centre also said that the blended fuel is not currently cheaper than pure petrol or fuel with lower ethanol levels, because “the government is seeking to compensate farmers adequately, and so E20 fuel becomes relatively more expensive to produce than pure petrol whenever oil prices fall to around $70 a barrel.” The Hindu reported. Critics have questioned  why fuel with 20% ethanol is not cheaper than pure petrol or fuel with 10% ethanol.   

The Centre may delay E25 petrol rollout amid backlash over ethanol blending, the Indian Express reported adding that the government originally planned to dispense E20 petrol only by 2030, but today it is the standard variant in the country. 

India is producing far more ethanol than it can consume, and the search is for newer markets. Industry participants said the country is considering exporting ethanol to neighbouring countries, including Nepal, Bangladesh, and Indonesia, which have 10% blending targets but lack adequate feedstock and distilling capacity, ET reported. 

The search for new markets to keep capacities afloat has gained momentum after India's E20 rollout sparked growing consumer backlash at home, the newspaper said.

India Faces Potential Natural Gas Supply Curtailments of Up to 1.5 mt/month, Its Biggest Cut Yet 

The US’ war on Iran has also left India grappling with severe LNG shortages. India is facing an estimated LNG shortfall of around 1.5 million tonnes (mt) per month. The Hindu cited Wood Mackenzie saying that Asia accounted for nearly 90% of Qatari and the UAE LNG shipments transiting the Strait of Hormuz (SoH) in 2025. The firm said that India, Pakistan and Bangladesh are navigating supply disruption in markets, “and spot prices are now at levels that are translating directly into demand curtailment, industrial fuel switching and, in the most acute cases, fertiliser plant shutdowns and power sector load shedding”’ the outlet said. 

The report said India faces potential supply curtailments of up to 1.5 mt per month, the largest expected cut yet. Gas allocation has been diverted to essential sectors,” the energy sector consultancy said.

Urea output is being squeezed by Qatari LNG curtailments. Energy-intensive industries are cutting run rates and switching to propane, fuel oil and naphtha at pace. India imports 80–85 per cent of its liquefied petroleum gas (LPG) via the SoH, meaning switching fuels trades one supply concentration risk with another, it added.

As the closure of the SoH impacted 46 per cent of India’s LNG imports from Qatar, the world’s fourth largest LNG importer diversified its cargoes with the US filling in the major gap followed by Oman, Nigeria and Angola.

On LNG sourcing, Equirus Securities in a recent note said “As Europe legally phases out Russian LNG from 2027, discounted Russian cargoes seeking alternative destinations could add further diversification lever for India, the outlet said. 

US Crude Oil, Gasoline Inventories Still Falling

Crude oil inventories in the United States fell by 564,000 barrels on July 10, a week earlier, US crude oil inventories fell by 399,000 barrels, Oil Price reported. 

Although commercial crude oil inventories excluding the SPR (Strategic Petroleum Reserve)  have been falling rapidly for three months now, shedding over 60 million barrels over the last twelve weeks, US crude inventories are down 9.2 million barrels so far this year, according to API data, kept in check by draws from the SPR, the report said. 

For the week ending July 10, another 2.99 million barrels left the SPR, bringing the new total to 316.5 million barrels—lower than the 2023 low reached during the Biden Administration’s huge drawdown and the lowest level in over 43 years. SPR inventories are now 415 million barrels shy of maximum capacity.

The outlet said the operational minimum for oil in the SPR is between 250-300 million barrels, below which the reserve may find it difficult to pump and process oil efficiently.

Falling US crude inventories reflect tightened domestic supplies, driving up spot prices. For consumers, this increases household expenses via higher gasoline and energy costs. For industry, it raises manufacturing and transport expenses, but temporarily boosts profitability for domestic energy producers and refiners operating at higher margins.

Crude oil inventories in the United States fell by 564,000 barrels on July 10, a week earlier, US crude oil inventories fell by 399,000 barrels, Oil Price reported. 

Although commercial crude oil inventories excluding the SPR (Strategic Petroleum Reserve)  have been falling rapidly for three months now, shedding over 60 million barrels over the last twelve weeks, US crude inventories are down 9.2 million barrels so far this year, according to API data, kept in check by draws from the SPR, the report said. 

For the week ending July 10, another 2.99 million barrels left the SPR, bringing the new total to 316.5 million barrels—lower than the 2023 low reached during the Biden Administration’s huge drawdown and the lowest level in over 43 years. SPR inventories are now 415 million barrels shy of maximum capacity.

The outlet said the operational minimum for oil in the SPR is between 250-300 million barrels, below which the reserve may find it difficult to pump and process oil efficiently.

Falling US crude inventories reflect tightened domestic supplies, driving up spot prices. For consumers, this increases household expenses via higher gasoline and energy costs. For industry, it raises manufacturing and transport expenses, but temporarily boosts profitability for domestic energy producers and refiners operating at higher margins.