India, the world’s third-largest energy guzzler, consumed a record 8.2 million tonnes (MT) of diesel and 3.4 MT of petrol during May, indicating an uptick in industrial and agricultural activity.
According to the latest numbers from the Petroleum Planning and Analysis Cell (PPAC), the consumption of diesel—the mainstay of India’s transport sector—is at an all-time high.
Before this, the country had clocked a record usage of 7.8 MT during April this year and in November and December 2022 helped by expanding industrial and commercial activity, as well as heightened demand for high-speed diesel (HSD) by the farm sector for irrigation. This was the highest consumption recorded in over two decades.
Analysts pointed out that diesel consumption grew in May on the back of rising industrial and construction activity and demand from the agricultural sector was also robust as food grain procurement season is in progress.
Similarly, in the case of motor spirit (MS), the consumption hit a record last month helped by growing personal travel and the increasing number of professionals returning to offices for almost 4-5 days a week compared to 2-3 days earlier. The opening of schools has also contributed to the growing usage of petrol.
Last month, OPEC in its monthly oil market report said that an uptick in manufacturing and construction activity coupled with growing air travel is expected to propel India’s oil demand, particularly diesel, petrol, and aviation turbine fuel (ATF), higher at 5.44 million barrels per day (mb/d) in April-June 2023.
The world’s most populous country consumed 5.40 mb/d of oil during Q1 2023 aided by healthy manufacturing and services activity, particularly during March 2023.
Looking forward, with anticipated healthy economic activity and ongoing air travel recovery, India’s demand for oil products is anticipated to remain strong in 2023, according to the OPEC report.
“In Q2 2023, oil demand is projected to rise by 0.3 mb/d y-o-y. The government’s proposed increase in capital spending is expected to support consumer’s purchasing power and boost the momentum of economic activity as construction and manufacturing activity accelerates,” it added.
These factors, combined with a steady rise in airline activity, will support healthy oil demand growth.