India's petrol, diesel demand to surge this year on increased construction, elections: S&P Global

An increase in industrial and construction activities, along with the upcoming general elections, will lead to a surge in India’s demand for petroleum products, financial research firm S&P Global said in its Commodity Insights report released on Thursday, March 14.

The average demand for petroleum products in 2024 is estimated to rise by 206,000 barrels per day (bpd), with gasoline (petrol) and gasoil (diesel) accounting for nearly two-thirds of it, the report said.

In February 2024, the country’s oil demand increased by 2.6% or 132,000 bpd year-on-year, the report added. As compared to January 2024, the demand increased by 256,000 bpd.

The month-on-month acceleration was driven by the receding winter, which led to an increase in mobility, S&P Global said. The report suggested that mobility is likely to rise further with the upcoming Lok Sabha elections.

Diesel demand to remain elevated

Diesel, used in the construction sector as well as a fuel for the movement of heavy vehicles, is the most consumed petroleum product in the country. Its demand is expected to grow by 60,000 bpd year-on-year in the first quarter (January-March) of 2024.

The consumption of diesel is estimated to rise further to 75,000 bpd in the second quarter, the report suggested. The general elections are likely to be held in April-May, which would fall in this quarter. The harvesting season is also expected to gain pace during this period.

The momentum is likely to continue in the third and fourth quarters, as robust economic growth will lead to higher industrial and construction activities, the report added.

Notably, the Petroleum Planning & Analysis Cell, an arm of the Ministry of Petroleum and Natural Gas, has estimated an overall fuel consumption of 238.95 million tonnes in FY25, which is higher as compared to the revised projection of 232.56 million tonnes for FY24.