Diesel demand growth falls to lowest since COVID-19 pandemic

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| Photo Credit: The Hindu

Growth in demand for diesel, India’s most consumed petroleum product, fell to its lowest since the pandemic within the monetary 12 months ended March 31 because the financial system expands at a slower tempo and consumption shifts to cleaner fuels.

Diesel consumption rose 2% to 91.4 million tonnes in 2024-25 (April 2024 to March 2025) fiscal, in accordance to provisional information launched by the Petroleum Planning and Analysis Cell (PPAC) of the Oil Ministry.

The growth in demand for diesel, which is used to energy vehicles and farm equipment, in 2024-25 was slower than 4.3% within the earlier fiscal and 12.1% in 2022-23.

Diesel accounts for about 40 per cent of oil utilized in India. Softness in demand growth mirrors financial exercise within the nation.

But greater than the financial system, it’s Electric Vehicles (EVs) that are beginning to reshape diesel demand in India.

Industry officers stated diesel nonetheless powers three-fourth of India’s transport sector however the growth is moderating due to the EV shift. The slower consumption rise in contrast to petrol was largely due to the business EV shift.

Electric buses are being quickly adopted in cities like Delhi and Mumbai, and electrical auto-rickshaws (e-rickshaws) have develop into dominant in lots of tier-2 and tier-3 cities, instantly chopping diesel use in city public transport.

Also, firms like Amazon, Flipkart, and BigBasket are switching their supply fleets to EVs. This shift primarily impacts diesel-driven vans and LCVs (Light Commercial Vehicles), decreasing demand within the logistics sector.

Petrol consumption rose 7.5% to 40 million tonnes whereas LPG demand was up 5.6% to 31.32 million tonnes.

Reflecting growth within the aviation sector, jet gas consumption was up almost 9% at about 9 million tonnes in 2024-25.

Demand for naphtha, which is used as a gas in industries, fell 4.8% to 13.15 million tonnes whereas gas oil consumption was down almost 1% at 6.45 million tonnes.

Bitumen, utilized in highway development, noticed consumption fall 5.4% at 8.33 million tonnes. Petroleum coke demand was up 8.6% and so was that of lubricants and greases whose use rose 12.3%.

Overall, petroleum manufacturing consumption in India was up 21% at 239.171 million tonnes. This growth was slower than the 5% rise in 2023-24, 10.6% within the previous 12 months and three.8% in 2021-22.

Oil consumption growth in 2024-25 was the slowest in a decade if the 2 COVID-19-marred years of 2019-20 and 2020-21 are excluded. During 2019-20 and 2020-21, oil demand fell because the nation was underneath lockdown in most elements to stop the unfold of the pandemic.

For the present fiscal which began from April 1, PPAC has projected a 5.7% growth in oil demand to almost 253 million tonnes. Diesel consumption is projected to rise by 3% to 94.1 million tonnes and petrol by 6.5% to 42.63 million tonnes.