Fuel Demand Surges in India as Diesel and Petrol Jump Despite LPG Plunge Amid Geopolitical Tensions

Fuel Demand Surges in India as Diesel and Petrol Jump Despite LPG Plunge Amid Geopolitical Tensions​

India's overall fuel consumption saw a sequential uptick in May, hitting 19.93 million metric tonnes, according to data from the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry. This figure represented a rise from 19.47 million metric tonnes recorded in April.

However, when viewed on a year-on-year basis, total petroleum product consumption declined by 6.5 percent from the 21.31 million metric tonnes consumed in May 2025. The market data reveals a clear division in fuel demand trends.

Diesel and Petrol Demand See Sequential Gains​

Diesel consumption showed steady growth in May, rising to 8.73 million tonnes from 8.33 million tonnes in April. Year-on-year, diesel demand was up 1.6 percent from 8.59 million tonnes reported in May 2025.

Petrol demand also improved sequentially and compared to the previous year. Consumption stood at 3.91 million tonnes in May, up from 3.68 million tonnes in April. This translates to a rise of approximately 6 percent from April and about 3 percent from a year earlier.

The rise in both petrol and diesel demand followed a crucial period where state-owned fuel retailers implemented price hikes across the board in May. Dealers reported that diesel prices were increased by Rs 2.71 per litre, while petrol prices saw an increase of Rs 2.61 per litre.

LPG Consumption Plummets Amid Supply Disruptions​

In stark contrast to rising demand for other products, liquefied petroleum gas (LPG) consumption experienced a sharp decline. LPG usage fell about 20 percent year-on-year, reaching 2.13 million tonnes in May from 2.68 million tonnes recorded in the same month last year.

Furthermore, LPG consumption was lower than the levels seen in April and March. This downturn is attributed to significant supply disruptions, specifically concerning shipping issues in the Strait of Hormuz.

These developments highlight an acute shortage for India. The country buys about 90 percent of its LPG imports, primarily sourced from the Middle East. Geopolitical instability, linked to the US-Israeli war with Iran, has contributed to India facing what is described as its worst LPG supply crisis in decades.

Key Product Performance: Naphtha and Bitumen Show Weakness​

Several other petroleum products registered weaker demand compared to a year prior. Naphtha sales plummeted by about 29 percent, falling to 0.67 million tonnes from 0.95 million tonnes in May 2025.

Bitumen consumption, essential for road construction, also dropped significantly. It stood at 0.52 million tonnes in May, a fall of about 39 percent from the 0.86 million tonnes recorded a year earlier.

These declines underline some of the sharpest year-on-year dips across the entire spectrum of petroleum product sales for May.

Jet Fuel and Fuel Oil Mark Steady Gains​

Jet fuel consumption remained broadly stable at 0.78 million tonnes in May, consistent with both April's figures and the reading from May 2025.

In positive news for certain sectors, fuel oil usage rose by approximately 24 percent from a year ago. Consumption stood at 0.63 million tonnes in May, up significantly from 0.50 million tonnes recorded last year.

Kerosene consumption was reported at 0.03 million tonnes in May, which is lower compared to the usage reported a year prior.