India's Fuel Demand Remains Firm As Asia Grapples With Covid

India’s fuel consumption recovery was a rare bright data point in the first half of August, while China, Japan, and Southeast Asia are struggling to contain a COVID resurgence with lockdowns and emergency measures that threaten to reduce immediate refined product demand.

India’s gasoline sales rose by 3.7 percent in the first two weeks of August compared to the same period of the pre-pandemic 2019, Bloomberg reported on Tuesday, citing preliminary data from the three largest fuel retailers in the country. Sales of diesel—the most used fuel in India—were down by 8 percent compared to 2019, but still higher than in July 2021, when diesel consumption had declined by 11 percent, according to the data obtained by Bloomberg.

India’s fuel demand plunged earlier this year when the world’s third-largest crude oil importer was swept by an overwhelming COVID wave between March and May. Gasoline sales in early May were down to a one-year low, and diesel consumption dropped to the lowest in seven months in the first two weeks of May.

Most of India was under local lockdowns in April and May when the resurgence of COVID started to overwhelm the healthcare system. The central government resisted calls for a nationwide lockdown, fearing a backlash on economic growth.

Since the peak in May, India’s COVID cases have been declining, and restrictions have been eased.

In early August, analysts expected that India’s pent-up demand after months of travel restrictions would outweigh higher prices at the pump.

“India’s gasoline demand is on the cusp of a V-shaped recovery as movement restrictions have been eased or lifted in several states,” Senthil Kumaran, head of South Asia oil at industry consultant FGE, told Bloomberg. 

According to the latest figures for August 1-15, the fuel demand recovery slowed down from July, but India was still one of the few countries in Asia with positive data about fuel demand, Bloomberg notes.

By Tsvetana Paraskova for Oilprice.com

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