Record high fuel prices dragged India’s fuel consumption for the second month in a row in February to its lowest since September, according to data from the Petroleum Planning and Analysis Cell (PPAC) of the Ministry of Petroleum & Natural Gas.
Petroleum product consumption fell 4.9% to 17.21 million tonnes in February.
Fuel prices across the country rose to reach ₹100 per litre in a few geographies as crude oil prices recovered from their lows last year.
Rising crude prices will add pressure on an economy that’s heavily dependent on imports and has just exited a deep recession.
Presently however, state-owned fuel retailers have put on hold any further price increases in the wake of the assembly elections in states like West Bengal.
Consumption of diesel, the most used fuel in the country, fell 8.5% to 6.55 million tonnes while petrol consumption was down 6.5% to 2.4 million tonnes. Petrol consumption was down 6.5% to 2.4 million tonnes.
Cooking gas LPG sales were up 7.6%. While sale of bitumen – used for making roads – was down 11%, that of Naphtha remained unchanged.
Meanwhile, S&P Global Platts Analytics in a report said that India’s domestic consumption of transportation fuels is expected to grow robustly between April 2021 and March 2022, as focus on the country’s economic expansion returns to center stage, after covid-19 fears ease.
“India’s oil demand is expected to grow by 480,000 barrels per day in 2021 after a sharp contraction last year, with gasoil to account for close to half the growth as the economy rebounds,” JY Lim, oil markets adviser at S&P Global Platts Analytics said.
The firm also noted in its earlier reports that a $35 billion package announced by the government last November to stimulate the economy — by boosting jobs, consumer demand, manufacturing, agriculture and exports hit by the pandemic — should see the country’s oil demand poised for a recovery as its economy picks up.