India's oil demand may revive amid festivals and elections, shows S&P Global Commodity Insights

Demand for oil products in India through the October-December quarter is expected to get a boost from festivals, agricultural activities, recovering from a few months of subdued consumption because of excessive rains, according to S&P Global Commodity Insights.

According to the commodities information services provider, India's oil demand decreased in September on a yearly basis, due to above normal rainfall, which affected road movement, construction, and mining activities.

"Looking ahead to Q4, we estimate India's oil demand to grow by 3.5-4 per cent year over year. We forecast an annual demand increase of 50,000-55,000 b/d for both gasoline and diesel in Q4, although the northeast monsoon rains may slightly impede demand," said Himi Srivastava, South Asia oil analyst at S&P Global Commodity Insights.


The monsoon season, typically running from June to September, was 8 per cent above the long-term average in 2024, according to state-run weather office India Meteorological Department. The southwest monsoon withdrew in mid-October, while the northeast monsoon began five days before date.

"This (heavy monsoon) particularly dampened diesel demand, which fell nearly 2 per cent compared to the previous year. However, gasoline demand remained resilient, growing by 3 per cent year over year, although it was down from the previous month," Srivastava said.

Elections in states like Maharashtra and Jharkhand are also expected to boost transportation fuel demand, it said.

Additionally, the marriage season from November to January typically results in increased automobile sales and goods movement, further pushing up fuel demand, added Srivastava.

India meets about 85 per cent of its crude oil demand through imports.

Lately, there has been a considerable volatility in global crude oil prices, primarily due to the ongoing geopolitical conflicts.

Hardeep Singh Puri, Minister for Petroleum and Natural Gas earlier this week said that there is no shortage of oil in the world and prices will come down soon, answering the question of the recent upswing in crude oil prices.

Speaking to the media, the Union Minister cited global factors such as the war in the Middle East and voluntary cuts in oil production which are influencing the oil prices in the global market.