India, the world’s third-largest oil user, increased its gasoline consumption in June by 17.9% compared to the same month a year prior as demand began to return to pre-pandemic levels.
Oil prices worldwide have increased due to worries about shortages and disruptions brought on by oil supplier Russia’s invasion of Ukraine, but Indian customers have been somewhat protected as Indian refiners have purchased less expensive Russian fuel that the West has avoided.
Fuel consumption, a proxy for oil demand, totaled 18.67 million tonnes, according to information from the Petroleum Planning and Analysis Cell of the Indian Oil Ministry.
“In India, demand for diesel and gasoline was comparatively low from May to September 2021. As a result, there has been an increase of about 18% from a low “r base,” said Ehsan Ul Haq of Refinitiv, but he added that pent-up demand might spur a rebound to pre-pandemic levels in the coming months.
Despite the recent rise in food and energy costs, he said that “the purchasing power of India’s middle class is rising,” although he did not completely rule out some demand destruction.
7.68 million tonnes of diesel were consumed, rising 23.9 percent from the previous year and around 21.9 percent from two years prior.
At 2.97 million tonnes, gasoline sales were 23.2% greater than they had been a year prior.
During the first two weeks of June, India’s gasoil consumption increased quickly, and long lines started to form at certain gas stations as worries about supplies increased.
Viktor Katona, co-head of crude analysis at Kpler, stated, “We expect genuine strength coming from middle distillate demand.”
This would result from increased exports, downstream expansions, and general demand, with “India quite the exception in more or less keeping fuel prices intact, partly because to its widespread buying of extremely discounted Russian crude,” according to Katona.
Private Indian refiners like Reliance and Nayara have been among the top consumers of cheap Russian supply this year.
However, the nation last week imposed a windfall tax on producers and refiners who had increased product exports in order to benefit from greater foreign margins in an effort to enhance local supplies.
