Fuel demand is, however, sharply up from last year’s low base when a nationwide lockdown hammered sales. The demand for petrol is up 146% and that for diesel is up 108% from last April, according to executives from state-run fuel retailers, which control about 90% of the fuel retail market.
Jet fuel sales are up 592% compared to last April but down 39% from 2019. Cooking gas sales are nearly flat compared to last year and up 12% over 2019.
After the lockdown restrictions were eased last year, petrol sales recovered quickly but diesel, which makes up 40% of the country’s oil demand, struggled. State-run companies sold 5% more petrol in March compared to the same month in 2019 but diesel sales were 5% lower. In April, both petrol and diesel sales have contracted compared to 2019.
Record Covid infections and deaths have shaken the country, restricted people’s movement and prompted local governments to issue lockdown orders in several states. In some states like Uttar Pradesh, the lockdowns have been limited to weekends while in others like Delhi and Maharashtra, they have been extended for weeks.
Industry executives fear the government may be forced to impose larger lockdowns given the ferocity with which the virus is spreading and claiming lives across the country. “If there is a larger lockdown, fuel demand will take a heavy hit,” said an oil company executive. “Lower domestic demand would also result in lower refinery runs.”
Following a sharp recovery in oil demand last year, Indian refiners had started operating at full capacity. The capacity utilisation has again started falling though some refiners are trying to place some of their volumes in the export market.
Fuel demand growth year-over-year