India's fuel consumption hits 10-month low in July amid heavy rains, flooding

India's fuel consumption experienced a notable dip in July, reaching a 10-month low, according to government data released this week. The decrease was attributed to the impact of monsoons, which restricted mobility across the country — the world's third-largest oil importer and consumer.

Total fuel consumption in July, often used as a proxy for oil demand, stood at 18.09 million tons, marking a significant 6.6 per cent decline from the previous month. Despite this drop, it reflected a 2 per cent increase compared to the same period in 2022.

In a news report Reuters said the data indicated that the sale of diesel, a crucial fuel source for trucks and commercially-run passenger vehicles, saw a substantial month-on-month decrease of around 13 per cent in July, amounting to 6.89 million tons.

Analysts have noted that the weakened demand for diesel was exacerbated by severe floods that affected several North Indian states during the first half of the previous month.

The news report quoted Viktor Katona, lead crude analyst at data and analytics firm Kpler, commented on the situation, stating, "With consumption patterns already slowing down due to the monsoon, weak July figures for diesel demand were aggravated by the floods in Northern Indian states over the first half of last month."

India typically witnesses a decline in fuel demand during the four-month monsoon season, which commences in June, due to heavy floods affecting various parts of the country. The current scenario is further compounded by restricted mobility and a broader slowdown in construction activity, leading to a decrease in bitumen demand.

Notably, the consumption of bitumen, used in road construction, experienced a significant drop of 30 per cent in July, while fuel oil use observed a 9.6 per cent increase during the same period.

Sales of gasoline in July were also impacted, registering a 5.3 per cent decrease compared to the previous month, with total sales amounting to 2.99 million tons.

On the other hand, cooking gas, or liquefied petroleum gas (LPG), demonstrated a positive trend, witnessing a sales increase of about 7 per cent, reaching 2.39 million tons. Similarly, naphtha sales experienced growth, rising by 9.3 per cent to reach 1.07 million tons.