State-refiners' diesel sales, which account for two-fifth of overall refined fuel sales in India, fell by 13 percent to 4.85 million tonnes in July from the previous month.
India's refined fuel consumption in July slipped from June, according to preliminary industry data, indicating slower industrial activity as high retail prices, floods and renewed coronavirus lockdowns in parts of the country dented demand.
Local fuel sales - a proxy for oil demand - plunged to historic lows in April when India imposed a country-wide lockdown.
State-refiners' diesel sales, which account for two-fifth of overall refined fuel sales in India, fell by 13 percent to 4.85 million tonnes in July from the previous month, and by about 21 percent from a year earlier, according to data compiled by Indian Oil Corp (IOC).
Falling local sales and subdued refining margins have forced refiners to curtail crude processing. IOC, the country's top refiner, doesn't see fuel sales recovering to pre-COVID-19 level in the near future.
Local fuel demand had gathered pace from May when India, the world's third-biggest oil importer and consumer, partly eased lockdown to bolster its sagging economy.
But a spike in domestic coronavirus infections has led to renewed imposition of lockdowns and addition of containment zones in several states.
Also, floods caused by rains have displaced and affected millions of people in some states and hit industrial and construction activity in the country.
Petrol sales by state companies fell by 1 percent to 2.03 million tonnes in July from June, and by about 11.5 percent from a year earlier, the data showed.
State retailers sold 10 percent more liquefied petroleum gas (LPG) in July from June at about 2.275 million tonnes and posted a growth of 3.5 percent from a year ago.Jet fuel sales in July rose 4 percent from June to about 218,000, but fell 65 percent from a year ago as curbs on air travel continued.