India’s fuel demand rose to a three-year high in March
and petrol sales touched an all-time high as the market accumulated supplies
anticipating price spikes. Despite this, the outlook for the post-pandemic
economic recovery of the country remains positive.

The country’s fuel demand surged 4.2% in March as petrol
and diesel consumption rose above pre-pandemic levels, showed official data
released on Monday.

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Total fuel consumption in March stood at Rs 19.41 million
tonnes, its highest level since March 2019, according to data from the
petroleum ministry’s Petroleum Planning and Analysis Cell.

As the economy continued to recover from the deep impact
of the third wave of the Covid-19 pandemic, demand for transport fuel surged in

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Diesel, the most consumed fuel in the country accounts
for around 40% of total petroleum product consumption, saw the demand rising by
6.7% to 7.7 million tonnes. Sales of Petrol, which surpassed the pre-Covid
levels a few months ago, were up 6.1% at 2.91 million tonnes.

Demand for both fuels in March was above pre-pandemic
levels. Diesel consumption was higher due to strong demand from
agriculture as well as consumers and petrol stations stocking up ahead of a
price hike. Cooking Gas (LPG) demand rose by 9.8% to 2.48 million
tonnes in March.

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The demand for fuel in the fiscal year ending March 31,
2022, increased 4.3% to 202.71 million tonnes, the highest since FY20.

In 2021-22, Petrol consumption was up 10.3% at 30.85
million tonnes and diesel consumption was 5.4% higher at 76.7 million tonnes.

Diesel sales were the highest since 82.6 million tonnes
in 2019-20 whereas demand for petrol was at an all-time high in FY22.

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LPG consumption was 3% high YoY at 28.33 million tonnes.

Demand for jet fuel or ATF rose 35% to 5 million tonnes
but was lower than 8 million tonnes consumption in the pre-pandemic year.

 Jet fuel or ATF
demand soared 35 per cent to 5 million tonnes but was less than 8 million
tonnes consumption in the pre-pandemic year. This was mainly because full
aviation services resumed only towards the end of the last month.

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Petroleum coke demand dropped by 9.7% to 14.1 million
tonnes while kerosene consumption was 17% down at 1.5 million tonnes in FY22.

Naphtha, which is used as fuel in industries, and
bitumen, which is used for road construction, grew at a marginally higher rate
at 14.2 million tonnes and 7.7 million tonnes, respectively.

Gasoline sales were 6.2% higher than a year ago at 2.91
million tonnes, their highest ever since 1998. To reduce the rising cost of oil
imports, India has shifted to Russian barrels that are available at a deep
discount citing “national interests”.

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Indian refiners have purchased at least 16 million
barrels of cheaper Russian oil for May loading on a delivered basis, the same
as the purchases for the whole of 2021, according to a Reuters report.

India’s economy has been kept on track by Russian oil
imports as it emerges from its pandemic slowdown, but the country must tread
carefully politically, according to Jeffrey Halley, the chief market analyst at