Fuel consumption in India, the world’s third-largest oil importer, is expected to rise by 4.7% in the next fiscal year between April 2023 and March 2024, estimates by the Indian ministry of petroleum and natural gas showed on Thursday.
India’s gasoline demand is forecast to increase by 7.1% over the next fiscal year, while gasoil demand is expected to climb by 4.2%, according to the ministry’s initial estimates reported by Reuters.
Demand for all products—except for naphtha—is projected to increase over the 12 months beginning in April, the estimates showed.
India’s fuel demand has seen a jump so far this month, preliminary consumption data showed last week.
India’s fuel demand rebounded strongly in the first half of February, recovering from a drop in January, with sales of diesel and gasoline jumping by double digits so far this month.
Sales of diesel, the most used fuel in India, jumped by almost 25% year over year between February 1 and 15, according to preliminary industry data cited by PTI last week. Diesel sales so far in February were also up by 16.7% compared to the first two weeks of February in 2021 and 7% higher than in the same period of 2020, just before the Covid lockdowns.
Compared to the first half of January 2023, India’s diesel sales rose by 10.3% this month.
Domestic demand for fuels may be about to rise further later this year as the government considers a cut in fuel tax as part of efforts to bring inflation under control.
Rising fuel demand in India and an expected rebound in Chinese oil demand after the reopening are set to be major bullish factors for the oil markets this year, analysts say. However, the expected strong demand in China and India could be offset by slowdowns in other economies, especially if the Fed continues with interest rate hikes to a higher end-point rate than previously thought.
By Tsvetana Paraskova for Oilprice.com
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