India's oil consumption jumped by 10% year on year in the fiscal year 2022/2023 ended on March 31, and demand has been growing in the new financial year, too.
Consumption of petroleum products in the world's third-largest crude oil importer increased by 10% to around 223 million tons in 2022/2023, Minister of State for Petroleum and Natural Gas, Rameswar Teli, wrote in a reply to a question in Parliament, as carried by Indian media.
Strong economic growth, an increase in vehicle sales, and growing industrialization and urbanization led to the higher demand for fuels, the minister noted.
The growth in petroleum demand in India was driven by a 13% rise in gasoline consumption and an increase of 12% in diesel consumption.
India has also cut the federal excise duty to spur consumption and boost the economy, Teli said.
Last week, the minister said that India's oil import dependence would increase in the coming years, from 78.6% in FY 2023 to more than 80% within the next four years.
Fuel demand in India started to accelerate early this year and jumped by 5% in March compared to a year earlier, as the world's third-largest crude oil importer continued to see consumption growing. In February, Indian fuel demand was estimated to have jumped to the highest level in at least 24 years, and refiners in India raised crude throughput by 2% in February compared to January.
After the end of the 2022/2023 fiscal year, India's fuel sales - a proxy for oil demand - surged in May from a year earlier and from April to new highs, suggesting that oil demand in the world's third-largest crude importer is strengthening and could outperform expectations. India's fuel sales exceeded expectations in May and could have further upside considering the outperformance lately, per a note by Standard Chartered analysts Emily Ashford and Paul Horsnell quoted by Bloomberg.
Fuel sales dropped in July, which is typical for India's petroleum demand during the four-month monsoon season that begins in June. Last month, gasoline and diesel sales in India were hit by heavy rains.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com More