India Oil Demand in July 2012

India’s recent floods will affect the country’s fuel consumption for June, not only in agriculture, but in the transport sector as well. Total oil demand is forecast to grow this year by 3.5% y-o-y, despite the big increase in the first quarter. Demand in May was strong, touching on a 5.4% increase y-o-y. The use of liquefied petroleum gas (LPG), diesel and naphtha led to this growth. Diesel-use was up by a massive 9%, adding another 0.12 mb/d to the country’s total oil demand. This excessive diesel demand resulted from a power-shortage in coal-operated power plants, which, in turn, led to the use of diesel in power-generators. Strong demand for diesel is expected to last until the end of the year, as long as the government does not interfere and increase retail prices.

Furthermore, the railways are stepping up their demand for diesel, as summer operations take place. Also, another factor that has boosted the use of diesel is the growth in new trucking registrations countrywide. Gasoline demand plunged by 4%, as a result of the price increases which were introduced by the oil companies in May. For 2012, India’s oil demand is expected to grow by 0.12 mb/d y-o-y. According to the Society of Indian Automobile Manufacturers, domestic passenger car sales increased by a robust 7.6% during May y-o-y, despite higher fuel prices, Increased excise duties on all car models and rises in vehicle prices.

Indonesia is the second largest oil-consumer in ‘Other Asia’, after India; it will consume 1.4 mb/d by the end of 2012. It is forecast that the country’s oil demand will be 5.4% higher this year than last. This strong demand is related to economic activity, which has pushed up the nation’s GDP by 5.8% this year. The country’s second-quarter oil demand is expected to grow by 30-tb/d y-o-y. Given the healthy economies in most of Other Asia, this region’s oil demand growth is estimated at 0.2 mb/d y-o-y.