After a period of negative growth, demand for petroleum products in India recorded an increase of 2.9% in October compared to the previous year, reaching 5.1 million barrels per day (bpd). This increase, noted after the end of the rainy season, reflects an improvement in agricultural activities, vehicle sales, as well as a recovery in the construction and mining sectors.
Diesel, the main contributor to this recovery, saw demand rise 19.9% in October, while vehicle sales saw an annual increase of 32%, according to Commodity Insights. Two-wheelers dominated this growth with an increase of 36%, followed by passenger vehicles (+32%) and utility vehicles (+6%). These dynamics have allowed Indian refineries to maximize their operations, maintaining high utilization rates in preparation for the months ahead.
Strengthened agricultural and industrial activity
The post-monsoon period has favored an intensification of agricultural activities and a restart of construction projects, often suspended during the rainy season. These essential sectors have contributed to a recovery in energy consumption, particularly diesel, essential for agricultural machinery and transport. Additionally, traditional festivals like Diwali and Navratri have boosted demand for transportation fuels, reflecting an overall recovery in consumption.
At the same time, refineries have adapted their operations. Indian facilities processed an average of 5.2 million bpd in September, an increase of 4.8% from the previous year. This level of processing is attributed to the end of maintenance operations and anticipation of the seasonal increase in demand.
Outlook through December
Analysts forecast a 4.5% increase in oil demand in November, before a slowdown in December to 2%, due to colder weather conditions in northern India. However, the wedding season, with around 4.5 million ceremonies expected, is expected to continue to boost road fuel consumption.
The end of the year could also see an increase in demand for aviation fuel, particularly during the end-of-year holidays. Even so, Indian officials are closely monitoring crude price fluctuations and geopolitical risks, such as tensions between Russia and Ukraine, that could influence the market.
Overall impact and annual evolution
Over the first ten months of 2024, consumption of petroleum products increased by 2.8% compared to 2023, reaching 5.1 million b/d. The main drivers of this growth include an increase of 2% for diesel and 8.4% for gasoline, as well as increases of 6.8% and 9.3% respectively for liquefied petroleum gas (LPG). and aviation fuel.
The outlook for 2024 remains positive despite uncertainties linked to geopolitical tensions and fluctuations in international crude prices. Officials hope that current pressures will ease, allowing the Indian market to benefit from increased stability.
