India's fuel demand has reached its highest level in over two decades in February, with the consumption of fuel rising by more than 5% to 4.82 million barrels per day (18.5 million tonnes), according to data released on Thursday. This is the 15th consecutive year-on-year rise, and demand was the highest recorded in data compiled by the Indian Oil Ministry's Petroleum Planning and Analysis Cell (PPAC) going back to 1998.
The surge in demand for fuel is attributed to a combination of profitable refining from record Russian crude imports in February, total utilization for primary distillation across India, and still-robust domestic consumption. Sales of gasoline rose by 8.9% year-on-year to 2.8 million tonnes, while diesel consumption climbed 7.5% to 6.98 million tonnes. Sales of jet fuel also jumped more than 43% to 0.62 million tonnes, according to the data.
The strength in demand highlights the industrial activity in Asia's third-biggest economy, which has been boosted by cheap Russian oil. The demand for jet fuel is expected to show the highest growth rate in 2023, followed by gasoline and diesel/gas oil. Despite the fact that the sales data for both gasoline and diesel showed a decrease in total volume in February compared to January, they experienced a significant increase in daily consumption.
While sales of bitumen, a road-building material, increased by 21.5% on a monthly basis, cooking gas, or liquefied petroleum gas (LPG), sales decreased slightly by 0.1% to 2.39 million tonnes. Meanwhile, fuel oil use dropped by just over 5% in February compared to January.
It is forecast that demand in March will be at 5.17 million barrels per day (bpd), and then the seasonal monsoon-driven slowdown will lead to it dropping to 5 million bpd in April-May. The increase in fuel demand is a sign of a rapidly growing economy, and India is poised to become the world's third-largest energy consumer by 2030, according to the International Energy Agency.
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Q1: What led to the surge in India's fuel demand in February?
The surge in India's fuel demand in February was attributed to a combination of factors, including profitable refining from record Russian crude imports, total utilization for primary distillation across India, and robust domestic consumption.
Q2: What is the projection for fuel demand growth rate in 2023?
According to Alan Gelder, VP Refining, Chemicals, and Oil Markets at Wood Mackenzie, the strongest demand growth rate in 2023 is projected to be in jet fuel, followed by gasoline and then diesel/gas oil.