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Indian fuel demand is beginning to improve as states begin to ease their lockdowns and refineries begin to raise run rates, Argus has reported.
The report cites India's oil minister Dharmendra Pradhan as saying economic activity has also been on the mend over the past three weeks, contributing to the fuel demand increase.
"We are confident that by the end of 2021, the fuel demand will recover to pre-pandemic levels," the official said, as quoted by FXStreet.
Refinery run rates at state-controlled companies have risen by between three and 10 percentage points, Argus wrote, citing industry insiders, adding that the increase comes amid higher prices at the pump. This suggests that refiners expect demand to continue picking up in the coming weeks despite the fact there are still movement restrictions in place and worry about yet another variant of the virus dubbed Delta Plus.
India suffered a fast and severe increase in Covid-19 cases last month, which prompted large-scale lockdowns that pressured fuel demand. Gasoline consumption alone dropped by 19 percent from April to May, Argus wrote in an earlier report, with diesel demand shedding a fifth in the period.
At the time, OPEC warned demand in India was the main drag on the expected lower-than-previously-thought global demand growth this quarter.
India is one of the biggest importers—and consumers—of crude oil and one of the most vulnerable to price spikes. It has called on OPEC+ repeatedly to return more barrels to global supply ever since demand began to improve, pushing prices higher.
This week was no exception: Pradhan yesterday called on the cartel to phase out the self-imposed production cuts it agreed to last year at a virtual meeting with OPEC secretary-general Mohammed Barkindo.
"We discussed recent oil market developments, trends in oil demand recoveries, economic growth forecasts and overcoming energy challenges," Pradhan said, as quoted by Oil & Gas Middle East.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.