India’s fuel consumption in June rose by 17.9 per cent from a year earlier, government data showed, as demand in the world’s No.3 oil consumer headed back towards pre-pandemic levels.
Global oil prices have surged in response to concerns about tight supplies and disruption linked to oil producer Russia’s invasion of Ukraine, but Indian consumers have to an extent been sheltered as Indian refiners have bought cheaper Russian fuel the West has shunned.
Consumption of fuel, a proxy for oil demand, totalled 18.67 million tonnes, data from the Indian oil ministry’s Petroleum Planning and Analysis Cell showed.
“Indian diesel and gasoline demand was relatively low in May-September 2021. As a result, around 18 per cent increase is from a lower base,” said Refinitiv analyst Ehsan Ul Haq, but added pent-up demand could drive a recovery to pre-pandemic levels in the next few months.
“The purchasing power of India’s middle class is rising in spite of recent spike in food and energy prices,” he said, although he did not rule out some demand destruction.
Diesel consumption rose 23.9 per cent year-on-year to 7.68 million tonnes and was up about 21.9 per cent from two years ago.
Sales of gasoline, or petrol, were 23.2 per cent higher from a year earlier at 2.97 million tonnes.
India’s gasoil demand rose rapidly during the first two weeks of June, and long queues appeared at some fuel stations as concerns grew over supply.
“We expect genuine strength coming from middle distillate demand,” said Viktor Katona, co-head of crude analysis at Kpler.
This would come from general demand, with “India quite the exception in more or less keeping fuel prices intact, largely thanks to its widespread buying of heavily discounted Russian crude,” downstream expansions and higher exports, Katona added.
Indian private refiners such as Reliance and Nayara have been among the biggest buyers this year of discounted Russian supplies.
However, the country last week to try to increase local supply imposed a windfall tax on producers and refiners that have boosted product exports to gain from higher overseas margins.
