The nation’s consumption of petroleum products rose 4.1 per cent to about 210 million tonnes, the oil ministry’s petroleum planning and analysis cell said Friday. Growth improved from the preceding year’s 2.7 per cent expansion, the slowest pace since 2013, as consumption was severely affected by a cash ban that crippled economic activity.
A spike in domestic oil prices, a credit crunch unleashed by the collapse of a shadow bank, slower vehicle sales and weak industrial activity affected oil consumption in the second-half last year, when demand declined in three of the six months.
“Diesel and LPG are two main culprits for pull-down in total demand last year,” Senthil Kumaran, senior oil analyst at energy consultancy FGE, said before the data were released. Market prices for the cooking gas “went up to Rs 950 a cylinder, way too high for the middle- and lower-income population.”
LPG demand last year rose 5.5 per cent, the slowest pace since 2013, as high prices dented growth. Diesel consumption, which accounts for 40 per cent of fuel demand in India, increased by 4.3 per cent to 82.7 million tonnes.
India’s total oil product consumption grew 3.2 per cent in December to about 18.5 million tonnes. Diesel usage rose 3.5 per cent to 7.4 million tonnes and gasoline consumption rose 10 per cent to 2.4 million tonnes.
The International Energy Agency, which expects the country to be the fastest-growing oil consumer through 2040, cut its 2018 demand forecast for India at least two times. The agency estimated India’s oil demand growth at 245,000 barrels a day in 2018 and 235,000 barrels a day in 2019.
Lower crude prices will support demand for transportation fuels, with gasoline and diesel consumption expected to increase by 8.8 per cent and 4.3 per cent in 2019, respectively, Kumaran said.