India’s fuel consumption for FY2024 increased 5%, hitting a record high as demand from the transport sector and raised naphtha sales drive up trade.

However, total oil demand totalled 21.09 million tonnes (mt), or 4.99 million barrels per day (mbpd), in March, down from 21.22mt (5.02mbpd) last year, according to preliminary data from the Petroleum Planning and Analysis Cell (PPAC), an arm of India’s Ministry of Petroleum and Natural Gas, analysed by Reuters.

Despite this drop, total fuel demand for the 2024 financial year, which ended at the end of March, hit a record high of 233.276mt (4.67mbpd) compared with 223.021mt (4.48mbpd) the previous year.

Diesel sales, driven by increased use of heavy goods vehicles and large passenger vehicles throughout the year, rose 3.1% year on year to 8.04mt in March, up 4.4% from FY2023.

According to GlobalData, Offshore Technology’s parent company, transport will soon be India’s fastest-growing sector, with an estimated compound annual growth rate of 7.5% until 2035. The country’s rapidly growing population and economy has also contributed to a ramp up in fuel consumption.

GlobalData analyst Tosin Coker said: “Demand for fuels in India is expected to continue growing, maybe not at the same rapid rate as the last year but, as the economy continues to grow and the demand for energy increases, the country plans to boost its refining capacity.”

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India’s oil imports have steadily increased over recent years. According to the International Energy Agency’s (IEA) February oil report, the country is set to become the single-biggest source of global oil demand between now and the end of the decade. The IEA forecasts that demand will reach 6.6mbpd in 2030, up from 5.5mbpd last year.

Alongside diesel, demand for jet fuel is also expected to rise significantly. The IEA’s report predicts that use of jet kerosene in India is expected to grow at an average rate of 5.9% per year.