India’s demand for oil and refined oil products is expected to grow by almost 4% in the fourth quarter of the current calendar year compared to the corresponding period of last year, according to S&P Global Commodity Insights.
The growth will be supported by the upcoming festival season and recovery seen in the agriculture sector post the excessive rains during the monsoon season.
India’s appetite for oil products in the October-December quarter is set to get a boost from the upcoming festival season as well as the agricultural season, recovering from a few months of subdued consumption because of excessive monsoon rains, S&P Global Commodity Insights said. The agency expects a growth of 3.5%-4% in the country’s oil demand on-year.
“Looking ahead to Q4 , we estimate India’s oil demand to grow by 3.5%-4% year over year. We forecast an annual demand increase of 50,000-55,000 barrels per day for both gasoline and diesel in Q4, although the northeast monsoon rains may slightly impede demand,” said Himi Srivastava, South Asia oil analyst at S&P Global Commodity Insights.
The country’s consumption of petroleum products in the first half of the financial year 2024-25 rose by 3% to 117.7 million tonnes compared to 114.2 in Apr-Sep 2023, as per data from the Petroleum Planning and Analysis Cell. During September however the consumption declined by 2% to 17.9 million tonnes.
“India’s oil demand decreased year over year in September 2024 due to heavier-than-normal rainfall, which affected road movement, construction, and mining activities. This particularly dampened diesel demand, which fell nearly 2% compared to the previous year. However, gasoline demand remained resilient, growing by 3% year over year, although it was down from the previous month,” Srivastava said. The country received 8% above the long-term average rainfall this year.
Coupled with the festive demand, upcoming elections in Maharashtra and Jharkhand are also expected to boost the demand for transportation fuel, as per analysts.
“Elections in major states like Maharashtra and Jharkhand are also expected to boost transportation fuel demand. Additionally, the marriage season from November to January typically results in increased automobile sales and goods movement, further pushing up fuel demand,” added Srivastava.
India meets 85% of its crude oil demand through imports. Brent crude oil prices inched higher on Thursday and hovered around $76 per barrel against the backdrop of continued uncertainty regarding the scope of an expected Israeli strike against Iran.