Analysts have slashed their estimates of India’s oil demand growth this year, with the consumption uptick to be the weakest since the Covid pandemic as the supply crunch and higher fuel prices slow gasoline and diesel demand.
Analysts Kpler and Rystad Energy have slashed their gasoline and diesel demand growth estimates for this year by between 30% and 90%, according to figures cited by Bloomberg.
Despite the major downward revisions to fuel demand growth in the world’s third-biggest crude oil importer, analysts don’t see this year’s growth slowdown as a structural decline. They expect India’s oil demand to rebound when the Middle East crisis is resolved, unlike in China, where forecasts and figures pointed to structurally falling road fuel demand even before the Iran war.
For India, Kpler last month slashed its refined products demand growth forecast by 39%, or by about 77,000 barrels per day (bpd) from the previous estimate of 128,000 bpd, to around 78,000 bpd.
The estimate of gasoline demand growth was slashed by 40% to 38,000 bpd, and diesel demand growth was revised down by about 30% to 42,000 bpd.
“Rising crude import costs, rupee depreciation, and growing under-recoveries at state retailers have pushed policymakers to intensify fuel-conservation messaging and administrative austerity measures, which are expected to slow transportation fuel demand growth during the second half of 2026,” Kpler’s Elif Binici said in May.
Rystad Energy, for its part, slashed its estimate of India’s diesel consumption growth to 4,000-5,000 bpd, down from 50,000-60,000 bpd growth previously expected.
Fuel-conservation policies and rising fuel prices amid the crisis will drag demand growth materially lower, while India braces for accelerated inflation and further deterioration of its fiscal and current account balances amid the supply crisis.
Despite the materially lowered forecasts of fuel demand growth, analysts don’t see a China-like structural decline beginning in India.
By Tsvetana Paraskova for Oilprice.com
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