Fuel Consumption Trends in India: Petrol Rises, Diesel Falls, and Mixed Signals for LPG and Jet Fuel

In July, India experienced mixed trends in fuel consumption, with petrol demand increasing while diesel sales declined. This pattern is often observed during the monsoon season when the agriculture sector, a significant consumer of diesel, reduces its demand due to reduced need for irrigation, harvesting, and transportation. Additionally, the rainy weather slows down vehicular movements, leading to lower diesel consumption. However, despite the decline in diesel sales, the manufacturing and services sectors in India have been in expansion territory for over a year, supporting overall oil demand.

Diesel Demand Affected by Monsoon Season

Diesel, being the most consumed fuel in India, experienced a 4.3% decline in consumption, totaling 6.15 million tonnes in July compared to the same period last year. The initial half of July saw a steep 15% drop in diesel sales, but it picked up in the second fortnight. This decline is a common occurrence during the monsoon months as the agriculture sector, heavily reliant on diesel for irrigation, harvesting, and transportation, reduces its demand during this period. Furthermore, the rainy weather slows down vehicular movements, contributing to the decrease in diesel consumption.

Petrol Consumption Sees a Rise

In contrast to diesel, petrol consumption experienced a 3.8% increase in July, amounting to 2.76 million tonnes compared to the same period in the previous year. Although petrol demand had dropped by 10.5% during the first half of July, it picked up in the latter half of the month. The month-on-month sales showed a decrease of 4.6%.

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Jet Fuel Demand Increases with Growing Passenger Traffic

With the continuous rise in passenger traffic at airports, there was a significant increase in jet fuel (ATF) demand during July. The demand rose by 10.3%, reaching 603,500 tonnes, as compared to the same period last year. This figure was more than double the demand in July 2021 but was 2.9% lower than the pre-COVID levels of July 2019. On a month-on-month basis, jet fuel sales increased by 1.6% when compared to June 2023.

LPG Sales Experience Mixed Trends

LPG (cooking gas) sales faced mixed trends in July. There was a 1.7% year-on-year decrease in consumption, amounting to 2.46 million tonnes. However, when compared to July 2021, LPG consumption was 4% higher, and it increased by 11.7% when compared to pre-COVID levels of July 2019. On a month-on-month basis, LPG demand witnessed an 8% increase when compared to June 2023, where 2.28 million tonnes of LPG were consumed.

In conclusion, India experienced varying trends in fuel consumption during July. Diesel demand saw a decline due to reduced usage in the agriculture sector and slower vehicular movements caused by the monsoon rains. On the other hand, petrol consumption increased, driven by the expansion of the manufacturing and services sectors. Additionally, jet fuel demand surged with the growth in passenger traffic at airports, while LPG sales faced mixed trends, showing a decrease in year-on-year consumption but an increase compared to previous years and the previous month. These trends indicate the impact of seasonal and economic factors on the consumption of different fuels in the country.