India's Fuel Demand Dips In March 2023 After Record High In February 2023

Due to the seasonal slowdown and the increasing temperatures nationwide, there has been a decline in India’s fuel demand, which hit record highs in February 2023, and decreased in the first half of March. Diesel, India’s most popular fuel, saw a decline of 10.2% to 3.18 million tons between 1st – 15th March 23, compared to the same time in 2022, while petrol sales decreased by 1.4% to 1.22 million tons. Diesel consumption, on the other hand, increased by 11.5% over the same time last year, and gasoline consumption was 16.4% higher in the first half of March 2023 than it was in the prior year.

Impact On Fuel Demand

• Seasonal Impact On Fuel Demand– Diesel sales increased by almost 25% in February 2023, while the desire for gasoline increased by almost 18%. This can be ascribed to the end of the winter slump and a pickup in demand, especially in the transportation and agricultural industries. However, the increase in temperatures in March 2023 signaled the beginning of the yearly slowdown. Therefore, demand for diesel decreased by 4.6% while gasoline sales decreased by 0.5% month over month.
• Impact of Inflation on the Demand for Fuel- In recent months, India’s revival has kept gaining steam, but it has been accompanied by high inflation, which has slightly slowed the momentum. Ever since the COVID-19 restrictions were loosened, the nation’s oil consumption has been steadily increasing.
• Demand for Jet Fuel Recovers- When compared to the same time last year, the demand for jet fuel, also known as ATF (Aviation Turbine Fuel), increased by 19.2% to 2,94,900 tons, reflecting the general trend. India’s total airport passenger traffic increased as the aviation industry proceeded to open, bringing it closer to pre-Covid levels. However, experts believe that because of ongoing restrictions in some nations, foreign traffic is still lagging.

Insight 

Despite a decline in the first half of March 2023, India’s fuel demand is still greater than the Covid-tainted first half of March 2020, it is essential to note. The gasoline demand is anticipated to increase as India’s recovery picks up speed. However, policymakers must take action to guarantee sustained growth because the effect of inflation on the overall recovery cannot be ignored.

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