In May, India's fuel demand slipped to its lowest since August 2020. The second wave of the coronavirus muted economic activity and stalled mobility with several states imposing lockdown-like restrictions.
While oil demand fell to 11.3 per cent to 11.5 million tonnes compared to April and was down 1.5 per cent from a year earlier, according to data from the Petroleum Planning and Analysis Cell (PPAC) of the Oil Ministry. Higher fuel prices have also added to the problem.
"It's primarily because of the lockdowns, but it's very difficult to isolate the impact on demand as even high oil prices could sort of pinch a little bit in terms of demand recovering more slowly," said Prashant Vashist, vice president and Co-Group head at ICRA.
As COVID infections hit record daily levels last month, it put the government on a war footing to contain the spread. However, with a downward dip being observed in the daily cases over the last few days, certain states are expected to ease restrictions which could boost consumption. Petrol consumption at 1.99 million tonnes in May was up 12 per cent over the previous year, it was down 16 per cent over April and 27 per cent compared to the pre-COVID era.
Diesel sales up by 0.7 per cent year-on-year basis, but went down by 17 per cent compared to April to 5.53 million tonnes and 29 per cent compared to the before the pandemic.
Hike In Diesel Prices
Diesel prices hit the ₹100 per litre mark in Rajasthan on Saturday, June 12. According to a price notification of state-owned fuel retailers, petrol price was hiked by 27 paise per litre and diesel by 23 paise. This hike was the 23rd one since May 4, reported NDTV. In Delhi, petrol prices reached an all-time high of ₹ 96.12 a litre, while diesel is now priced at ₹ 86.98 per litre.