Breaking down the demand surge for petroleum products

Source: The post is based on the article “Breaking down the demand surge for petroleum products” published in Livemint on 14th April 2023

What is the News?

Demand for refined petroleum products hit a record in FY23 led by transportation fuel. 

What is the trend in petroleum products?

In the Financial Year 2023(FY-23), the demand for petroleum products was 10.2% higher than the year before.

In previous years, the demand was impacted due to the Covid-19 pandemic. But in FY23, demand for most products crossed pre-covid levels as various sectors of the economy made a recovery from the pandemic slowdown. 

Why is India seeing such a surge in petrol consumption?

The increase in consumption of petrol, diesel and jet fuel during FY23 came on the back of growth in industrial activity and travel. These activities recovered after slowing down in the previous two fiscals because of the pandemic.

Does the Ukraine war have anything to do with this?

The Russian invasion sparked an energy crisis. India had to diversify its oil import sources and raise imports for energy security. Cheap oil from Russia was also added to the import bill. 

Will the demand for petroleum products stay strong this year?

The global economy is expected to slow down. Yet, the demand for petroleum products in India is expected to stay robust.

This is because an increase in domestic consumption, fuelled by accumulated household savings during and after the pandemic will boost the demand.