FY20 has been a turbulent year for the country in many ways; the most significant event has been the COVID-19 pandemic, and petroleum consumption in the country during the year could be one indicator of the turbulence caused. The overall petroleum consumption i.e. volumes sold by oil marketing companies witnessed a drop of over 10 percent, year-on-year. Petrol sales remained flat in FY20, while furnace oil and high-speed diesel declined by 36 and 9 percent year-on-year, respectively. This was seen coming not only because of decline in demand due to coronavirus but the already slowing economy including negative growth in LSM and shifting fuel preference from furnace oil to RLNG and coal.
A look at the recent monthly petroleum sales shows that as the lockdown restrictions eased in early May 2020, volumes of furnace oil and petrol sold by the oil marketing companies rebounded. Diesel sales that were already up due to the harvesting season received a further boost as economic activity saw limited revival. Moreover, lower smuggling due to strict border control amid the COVID-19 outbreak also allowed domestic sales to takeoff. HSD sales increased by 68 percent year-on-year in June 2020.
The surprise in June 2020 was the growth seen in petrol sales. Amid the coronavirus pandemic and the different phases of lockdown that significantly impacted mobility and petrol crisis that erupted in June leading to severe shortage, petrol sales in May and June 2020 stood astonishingly higher on a year on year basis. June 2020 petrol sales were unexpectedly high growing by 28 percent year-on-year and 14 percent month-on-month when there seemed little room for growth. Lower petrol prices and the resultant hoarding, and increased intercity travelling as public transport remains shut are some factors that could have lifted consumption of petrol but do not fully explain the highest ever monthly sales (For more read: Petrol record high sales mystery).
FY21 however might not start on a high note as July 2020 volumes are expected to be subdued versus the robust May and June tally. This is because petrol consumption could seriously be affected despite further easing of restrictions as the government has jacked up prices significantly. Moreover, growth in white oil could be curtailed in July due to hoarding in June. On the other hand, furnace oil could see some recovery as the government has allowed import to meet demand from the IPPs.