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India's Top Oil Refiner Boosts Operations As Demand Picks Up

As India's fuel demand picks up from April lows, 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 currently operate at around 60 percent of their design capacities, while plans are to boost those utilization rates to about 80 percent of capacity by the end of this month, the company said in a statement on Monday.  

"The Corporation's refineries were operating full throttle before the COVID lockdown but had to curtail throughputs and bring operations down to nearly 45% of design capacities by the first week of Apr. '20 in view of product containment issues forced by a steep drop in demand," the refiner said, noting that even at low capacity utilization, it was on standby to scale up oil refining throughputs once demand begins to recover.

In April, gasoline and diesel demand in the world's third-largest oil importer, India, was estimated to have crashed by around 60 percent annually due to the nationwide lockdown to curb the spread of the coronavirus.

India – with a population of 1.3 billion people – went into a nationwide lockdown at the end of March. It has since extended that lockdown to the middle of May.

Due to this lockdown and to India's struggles to contain the spread of the coronavirus, fuel demand plummeted in April. Refineries then cut run rates and struggled to store crude and refined products in the dwindling available storage capacity.  

Now the increased crude processing throughput at the largest Indian oil refiner suggests that the worst of the demand loss may be over in the world's third-biggest oil importer.

With lockdowns eased in some European countries and U.S. states, gasoline demand worldwide has also been crawling up in the past two weeks, fueling hopes that oil demand for road transportation could lead the recovery of global oil demand.

By Tsvetana Paraskova for Oilprice.com

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