Consumption of transport fuels declines in June, after May’s record high

The consumption of transport fuels such as diesel, petrol and aviation turbine fuel (ATF), which accounts for a major chunk of India’s refined petroleum products usage, fell in June this year after hitting a high in May.

According to the Petroleum Planning and Analysis Cell (PPAC), consumption of diesel, which accounts for more than one-third of India’s refined products usage, fell by 5 per cent M-o-M, but rose marginally by almost 1 per cent on an annual basis to 7.96 million tonnes (mt) last month.

Petrol consumption also fell by 5 per cent on a monthly basis, but rose by 4.22 per cent Y-o-Y to 3.29 mt in June. The usage of ATF fell by 5.6 per cent M-o-M to 698,000 tonnes last month. On an annual basis, jet fuel volumes rose a robust 8.7 per cent.

Poll effect

Analysts and trade sources said that May 2024 consumption was higher due to campaigning and voting in the just-concluded Lok Sabha elections, the beginning of summer vacations and growing industrial and commercial sectors.

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Besides, June marks the beginning of the four-month long rainy season, which leads to a decline in industrial and mining activity that has a bearing on the transport sector for ferrying minerals and products. Subsequently, transport activity also declines. Air travel is also impacted during the monsoon season.

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PPAC data show that for the 12-month period, ending June 2024, the consumption of diesel and petrol during June was the third highest during the review period. Diesel usage reported a high of 8.39 mt in May 2024 followed by 8.04 mt in March 2024. Similarly, petrol consumption hit its highest in May at 3.45 mt followed by March 2024 at 3.32 mt.

Jet fuel

Jet fuel consumption declined in June after clocking a volume of more than 700,000 tonnes in December 2023. Between December 2023 and May 2024, jet fuel usage averaged at over 730,000 tonnes. The decline in June to some extent is due to the rainy season and the end of summer vacations.

In fact, the consumption of diesel and petrol during Q1 FY25 is a record. In FY24, the consumption of diesel and petrol at 89.65 mt and 37.22 mt, respectively, was also an all-time high.

Analysts expect India’s crude oil imports to remain robust backed by strong domestic demand. However, there is a downside risk from softer refining margins due to slowing global oil demand that can impact exports.