Boosted by a transport industry catering for festive travel, India’s fuel consumption hit a seven-month peak in December 2023.
Compared to December 2022 levels, PPAC’s data revealed an increase in demand for HSD, LPG, Naphtha, ATF, lubricants and greases, bitumen and petroleum coke.
HSD (diesel) grew 1.06% between November and December 2023, increasing from 7.53 million metric tons to 7.61 million. Primarily used in the transport sector, HSD is a popular fuel for heavy goods vehicles and commercially run passenger vehicles, including buses and planes.
According to GlobalData analyst Tosin Coker, the transport sector is partly responsible for December’s spike in demand: “The peaked demand for fuel began in October as festive season approached and peaked in mid-December, which sees an increase in transportation, mobility, and consumption.
“Sales of diesel, mainly used by trucks and private cars, increased as people travel domestically to celebrate and jet fuel consumption was at its highest level since 2020 due to COVID-19 and as people travel for the festive period.
“This, also coupled with the commencing of the ‘winter’ season which is usually accompanied by an increase in construction activity and projects, which also saw the rise in bitumen for road construction from September.”
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Despite being responsible for less fuel consumption than the commercial, residential and industrial sectors, the transport industry will continue to be a driving factor in India’s growing fuel consumption. GlobalData estimates that it will require 102,345GWh of fuel by 2035, an increase of 298.3% on 2023 levels.
GlobalData also predicts that transport will be the fastest-growing sector, estimating that it will experience a CAGR of 7.5% until 2035. However, the industrial and residential sectors will still be responsible for the majority of India's fuel consumption, despite having slower CAGR rates of 7.2% and 6.5%, respectively.
In other areas, PPAC's data revealed that India's MS (gasoline) demand showed a slight increase from December 2022 figures. However, there was a notable reduction from the previous month, with sales dropping by 4.5% from November 2023.
India accounted for 5.05% of the consumption and demand of oil and gas globally in 2023. This established the country as the third biggest consumer, below China which accounted for 34.5%, and the US which accounted for 15.04%.
Coker attributed the demand to the country's 1.4 billion population and rapidly growing economy, noting the likelihood that India will continue to sustain the growth by increasing capacity.
She said: "Compared to other nations, India depends heavily on importation of crude oil and fuels. In 2021-22 India became the major buyer of discounted Russian oil and imported them as fuel.
"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."