India’s September fuel demand drops to one-year low

India’s fuel consumption hit one-year low in September, slipping by half percentage point month on month to 18.63 million metric tons, oil ministry data showed on Tuesday.

Why it’s important

India is the world’s third-largest consumer and importer of oil and the largest buyer of Russian seaborne crude, taking advantage of discounts on Russian oil as Europe and the U.S. shun those barrels over Russia’s invasion of Ukraine.

By the numbers

Though down slightly from the previous month, September fuel demand was up 7% year on year.

Sales of gasoline, or petrol, were down about 4% from August at 3.4 million tons in September but grew by 7.9% from a year earlier.

India’s August fuel demand drops to 11-month low

Diesel consumption rose 3.2% on a monthly basis to 6.79 million tons in September for a 6.6% increase year on year.

Sales of liquefied petroleum gas rose by 6.9% year on year to 2.79 million tons and were up 0.7% from August.

Naphtha sales fell 8.8% on a yearly basis to 0.93 million tons while sales of bitumen, used for making roads, jumped 33% from a year earlier to 0.56 million tons while fuel oil use dropped 10.7% year on year to 0.5 million tons and was down 3.8% from August.

Context

Indian oil refiners are increasing gasoline and diesel exports to their highest in several years, driven by expanded crude processing capacity and increased domestic ethanol blending that has freed up fuel supplies for overseas markets, traders and analysts said.

There is enough Russian oil in the market for Indian refiners because Ukraine’s attacks on Russia’s energy facilities have reduced its refining capacity and made more crude available, a government official told Reuters on Monday.

Key comments

The monsoon period continued to weigh on monthly growth in oil demand, in line with the seasonal patterns, but there was an acceleration in demand across all products compared with the same time last year, said UBS analyst Giovanni Staunovo.