Oil demand by India likely to touch new record next fiscal

Consumption of all major fuels — diesel, petrol, and liquefied petroleum gas (LPG) — will likely touch an all-time high in the next fiscal, the data shows. Consumption of diesel, which is the most used fuel in the country, is seen rising 4.3 per cent over current fiscal’s revised estimate to 90.56 million tonnes. Petrol consumption is seen higher by 7.7 per cent at 37.80 million tonnes. Higher demand for these two fuels reflects robustness in the transportation and industrial segments. LPG consumption is seen rising 1.7 per cent year on year to 29.12 million tonnes.

Consumption of aviation turbine fuel (ATF), which had so far lagged behind other fuels in terms of recovery, is also projected to beat the previous consumption record of 8.30 million tonnes in 2018-19. ATF consumption is seen rising 16.4 per cent over the revised estimate for the current fiscal to 8.61 million tonnes. ATF demand had suffered substantially due to the pandemic as travel restrictions hit air traffic. While domestic air traffic recovered at a relatively faster pace, international traffic took significantly longer.

India is the world’s third largest consumer of crude oil and depends on imports to meet over 85 per cent of its requirement. The country currently has a refining capacity of around 250 million tonnes per annum (MTPA), and plans are afoot to scale it up to around 450 MTPA over the next few years as India’s oil demand is expected to be on the ascent for the foreseeable future. As per a projection by the International Energy Agency, India’s oil demand could rise from 4.7 million barrels per day (bpd) in 2021 to 6.7 million bpd by 2030 and 7.4 million bpd by 2040.