India is the world's third-largest oil consumer and importer and is key to global oil demand growth. A weak demand from China and fears of oversupply in the market have been weighing on global oil prices.
The domestic consumption of petroleum products in the April-August period has risen 3.3% year-on-year, compared to 6% in the same period last year, according to the oil ministry data. The consumption growth was 5% for the full year 2023-24 and 10.6% for 2022-23.
Sales of diesel, which accounts for 38% of the volume of all refined products consumed in the country, have risen barely 1% this fiscal year, compared to petrol's 8% and LPG's 7%.
In August, diesel sales fell 2.5% year-on-year, driven by a combination of high rainfall, vehicle sales decline and lower power consumption. "High rainfall activity coupled with disruptions due to flooding contributed to reduced movement and degrowth in diesel," the oil ministry's petroleum planning and analysis cell said in its monthly report.
The sales of commercial vehicles declined 6% and tractors fell 11.4% in August. Peak demand for power dropped to 216.9 gigawatt (GW) in August from 240.5 GW in the same month last year.
Diesel consumption by the railways and road transport fell during the April-August period. Its sales to manufacturers, however, rose.
After diesel, petrol is the most consumed refined product in the country, making up 17% of the volume of all refined products. LPG comes third, with a 12.5% share and petcoke fourth with an 8.4% share.
Slowing domestic consumption growth and a difficult export market have also impacted the refiners' output. Domestic production of refined products has grown by 1.8% in the April-August period against 3.7% in the same period last year.
Exports of petroleum products have fallen 2.7% year-on-year in volume terms in April-August. In value terms, the decline is steeper at 6.7%.
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