Indians are using more diesel, petrol, and liquefied petroleum gas (LPG) than ever.
In the financial year that ended in March 2023, India consumed 222.30 million tonnes of petroleum products, up 10.2% from the previous year, according to the latest oil ministry data. This is the highest-ever in the history of the world’s third-largest oil consumer.
Demand for fuel is deemed a proxy for manufacturing activity, a part of which may be driven by higher government capital spending, according to independent oil market analyst Sugandha Sachdeva. “That means huge demand for construction and infra(structure) leading to more demand for oil products, especially in a pre-election year,” Sachdeva told Reuters.
The demand for fuel began recovering in 2021-22 from the hit it took in India during the covid-19 pandemic as industrial activity slowed significantly.
India’s increasing demand for crude oil
India imports more than 85% of its crude oil requirements, and oil demand is only expected to rise in the coming years. Paris-based International Energy Agency has projected it to increase from 4.7 million barrels per day (bpd) in 2021 to 6.7 million bpd by 2030.
Currently, India has a refining capacity of around 250 million tonnes per annum. Plans are underway to notch it up to 450 million tonnes in the next few years.
In March, India’s crude oil demand was driven by bitumen, used to build roads. Sales soared 16.5% to 933,000 tonnes from February. Transportation fuels like diesel, which account for 40% of the country’s total consumption, also jumped 11.6% in March to 7.87 million tonnes.