According to S&P Global Commodity Insights, demand for oil products in India increased 6.7% year on year and 1.5% sequentially in September, owing to solid vehicle sales and industrial activity.
Demand for all goods, including petrol and diesel, increased in September compared to August. The only exceptions were naphtha and kerosene.
“Middle distillate demand to drive 53% of total Indian oil demand growth in 2023 with gasoline and naphtha together to contribute 28% of the growth,” it said.
In September, India’s oil product consumption climbed by 73,000 bpd due to strong vehicle sales and industrial activity ahead of the impending holiday season, although rainfall fell 5.6% short of the long-term average for this season.
Along with increases in gasoil, jet fuel, and gasoline, LPG saw substantial growth as the government slashed domestic cylinder costs by $200 per cylinder.
Diesel usage increased by 0.4% month on month and 3.8% year on year in September.
Data on e-way bill production and daily average highway toll transactions show that demand in the mobility industry has remained robust. There was some sluggishness in the agricultural sector, as well as a decrease in tractor sales, which resulted in decreased fuel use.
The monsoon season finished with a 5.6% decrease in total rainfall received, which had a significant impact on planting and harvesting operations. This year, gasoil consumption is predicted to be close to 7% higher than pre-COVID-19 levels.
Himi Srivastava, analyst, South Asia Oil Markets, S&P Global Commodity Insights, said: “India’s gasoline demand saw a September increase to 869,000 b/d due to lower rainfall and strong auto sales keeping mobility demand strong. As the temperatures rose, the requirement of running air conditioners in cars also increased thereby increasing the consumption of gasoline. India’s gasoline demand rebounded to above pre-covid-19 levels in 2021 and is expected to be some 23% higher than 2019’s level in 2023.”
Total jet fuel and kerosene demand fell to 182,000 bpd in September, a 3% fall from the previous month, as kerosene demand fell owing to the transition to LPG, but jet fuel consumption grew by 0.4% month on month.
The announcement comes only days after OPEC upped its global oil demand prediction. According to OPEC’s World Oil Outlook, oil consumption will rise 16% over the next two decades to 116 million barrels per day in 2045, an increase of roughly 6 million barrels per day above the previous prediction.
OPEC said that this increase might be substantially greater. India, China, other Asian nations, Africa, and the Middle East may drive demand growth.