India’s consumption of petrol and diesel rose in May amid robust demand in the month as the country voted in the next Lok Sabha.
The consumption of diesel—a proxy for demand in the larger economy—was higher by 5.5 percent in May than in the previous month while petrol demand witnessed 4.4 percent growth on a month-on-month basis, according to official data.
In May, India consumed 8,365 tonnes of diesel while 3,429 tonnes of petrol. The corresponding figures for April were 7,925 MT and 3,284, respectively. The consumption of both fuels was higher in May from the year-ago period as well. In India, diesel is the most consumed fuel, primarily used by trucks and commercial vehicles.
The spike in fuel demand coincided with campaigning for the general election peaking in May. India consumed a total of 20,485 tonnes of petroleum products in May against 19,859 tonnes in the previous month. The higher fuel demand comes after a decline in diesel demand and a marginal increase in petrol demand in April.
Growing oil demand
India, one of the largest energy consumers in the world, is expected to be at the forefront in oil demand before the end of 2030. The International Energy Agency had said in February that India is set to overtake China to become the leading driver of global oil demand by 2027.
According to a recent report by the Organisation of Petroleum Exporting Countries (OPEC), strong economic growth in India is expected to bolster the country’s oil demand in 2024 and 2025. OPEC said India is expected to see healthy oil demand growth of 228 thousand barrels per day (bpd) in 2024 from last year, to average 5.57 million bpd.
Despite India’s focus on green energy initiatives, the government has reiterated that the country’s reliance on oil would remain high to ensure energy availability. India has been diversifying its sources for crude oil to ensure assured availability as the country is dependent on imports for over 85 percent of its crude requirements.
“Strong investment is expected to drive economic growth, together with an expansion in manufacturing activity with the government focusing on this sector to further support the economy amid an expected surge in construction. Overall, these factors are expected to bolster India’s oil demand in 2Q24,” said the OPEC report.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
