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India’s fuel demand, which had crashed by 60 percent during the early days of its two-month lockdown, is set to reach pre-coronavirus levels in June, Indian Oil Minister Dharmendra Pradhan told Times of India over the weekend.
In May, demand for fuel in the world’s third-largest oil importer is back at 65 percent compared to May 2020, “and will reach pre-Corona level in June,” Pradhan told TOI.
After the easing of the lockdown in India, two-wheelers and small cars will remain an affordable option for maintaining social distancing, thus boosting demand for gasoline, according to the minister. Higher vehicle traffic, farm-sector activities, and the resumption of train service and flights will raise demand for diesel and jet fuel, Pradhan told TOI.
Last week, Indian oil industry executives told Bloomberg that crude oil demand in India would take longer to recover than many hope for as the country braces for the worst recession in its history after a two-month lockdown.
In April, gasoline and diesel demand in India was said to have crashed by around 60 percent year on year.
But this month, India’s fuel demand has picked up pace from the April lows, and Indian Oil Corporation (IOC), the country’s biggest refiner and fuel retailer, is gradually boosting operations across its refineries and aims to raise utilization to 80 percent by the end of May, compared to 45 percent in early April.
Indian Oil’s refineries operated at around 60 percent of their design capacities in early May, while plans were to boost those utilization rates to about 80 percent of capacity by the end of this month, the company said in a statement on May 11.
The litmus test for demand recovery after a lockdown—China—is showing signs of rebound, according to IHS Markit. In April, China’s oil demand reached 89 percent of the demand from April last year, while oil demand is expected to reach 92 percent of the prior-year level in May, the consultancy said.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.