Festival season, agriculture push up diesel demand in November

Representative image

Diesel consumption picked up in November amid festival season and higher demand from the agricultural sector after months of tepid demand, suggesting an uptick in economic activity.

The demand of the fuel, mainly used by trucks and commercially run passenger vehicles, in November grew 6.8 percent from the previous month to 8,165 tonnes, oil ministry data shows. The demand of diesel, the most consumed petroleum product in India, was up 8.5 percent from the year-ago period.

In recent months, demand for diesel has remained low primarily due to heavy rains. Slower economic growth also affected diesel consumption, with the country’s GDP growth slowing to a seven-quarter low of 5.4 percent in the September quarter.

The country is also seeing a change in consumption pattern, with petrol demand picking up over diesel as middle class expands.

Petrol consumption, however, remained flat in November from the previous month but grew by 9.5 percent year-on-year.

Aviation turbine fuel (ATF), or jet fuel, consumption declined 1.1 percent in November from the previous month.

Growing energy demand 

Despite growing focus on alternative fuels, India’s reliance on oil for meeting its energy demand is expected to remain strong in the coming years.

The government has said it expects India to become the largest source of rise in global oil demand by 2030, saying growth in developed economies and China would initially slow and then subsequently go into reverse.

According to the government’s Indian Oil Market Outlook to 2030 report, massive industrial expansion would translate into robust diesel demand, accounting for almost half of the rise in the nation’s demand and more than one-sixth of total global oil demand growth through to 2030.

India’s petroleum product demand is projected to grow by nearly 2 million barrels per day (bpd) by 2035, an analysis by S&P Global Commodity Insights has said.