Slowing fuel demand in China and weaker growth elsewhere have prompted the biggest private refiners in India to raise their fuel sales at home as margins abroad are falling.
Reliance Industries of billionaire Mukesh Ambani, as well as Nayara Energy, whose largest shareholder is Russia’s oil giant Rosneft, are increasing their fuel sales in India, Reuters reports.
India’s fuel demand growth remains solid and will rise at a steady clip in the coming years.
India’s growing demand contrasts with trends in China in recent months. Chinese consumption of transportation fuels has peaked, many forecasters and state giant China National Petroleum Corporation (CNPC) say.
Regionally, Asia’s imports of refined petroleum products plunged in April to the lowest level since 2020, due to higher spring refinery maintenance at key fuel exporters in the region and softer demand for gasoline and diesel.
On the other hand, India’s oil demand will grow by 3.4% this year, according to OPEC’s latest Monthly Oil Market Report. Diesel and other transportation fuels will support India’s oil product demand, which is expected to grow by 188,000 barrels per day (bpd) this year from 2024 to average 5.7 million bpd, OPEC said in its report in May.
Next year, India’s oil demand is projected to grow by 246,000 bpd year-over-year to average 6.0 million bpd, “supported by robust economic growth amid healthy transportation and manufacturing activities,” the cartel noted.
To capture the upside in India’s market and insulate themselves from weaker margins outside India, Reliance Industries and Nayara Energy are boosting domestic fuel sales.
These two private refiners also have the cost advantage over state-run refiners as Reliance and Nayara are importing and processing cheaper Russian crude.
“Private refiners are increasingly looking to supply to the domestic market, which is still growing at a healthy pace,” Prashant Vasisht, senior vice president at credit rating firm ICRA, told Reuters.
By Tsvetana Paraskova for Oilprice.com
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