India's Fuel Consumption Declines Amid Iran War Impact
Iran war fallout: Fuel use drops 6.5% in May; experts see warning signs for economy
The Economic Times
Image: The Economic Times
India's fuel consumption dropped by 6.5% in May to 19.93 million metric tonnes due to supply issues and rising prices linked to the Iran war. While petrol and diesel sales saw slight increases, other petroleum products experienced significant declines, signaling potential economic concerns.
- 01Total refined product consumption in India fell to 19.93 million metric tonnes in May.
- 02Sales of petrol increased by 3.3% and diesel by 1.5%, but other products like naphtha and LPG saw declines of 29% and 20.5%, respectively.
- 03The decline in fuel consumption is seen as a sign of weakening economic activity, particularly in transportation and construction sectors.
- 04Higher diesel prices and disruptions in supply from the Gulf region have pushed consumers towards cheaper alternatives like fuel oil, which rose 24% in consumption.
- 05Private fuel retailers experienced decreased sales, while state-run refiners saw an increase in sales.
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In May, India's total consumption of refined petroleum products decreased by 6.5% year-on-year, reaching 19.93 million metric tonnes. This decline is attributed to the ongoing supply squeeze and rising prices stemming from the Iran war. While petrol sales increased by 3.3% and diesel by 1.5%, other key products such as naphtha, liquefied petroleum gas (LPG), and bitumen experienced sharp declines of 29%, 20.5%, and 39.4%, respectively. Industry experts indicate that this slowdown in fuel consumption signals weakening economic activity, particularly in transportation and construction sectors. The near closure of the Strait of Hormuz and import restrictions have further exacerbated the situation, leading to a shift towards alternative fuels like fuel oil, which saw a 24% increase in usage. Additionally, rising bulk diesel prices have prompted consumers to seek more efficient alternatives. The contrasting sales trends between private and state-run fuel retailers highlight the impact of pricing strategies on consumer behavior.
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The decline in fuel consumption may lead to economic slowdowns, affecting transportation and construction sectors.
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