India’s fuel demand has dropped by a steep 10-11 per cent in the first two weeks of March as the outbreak of coronavirus (Covid-19) led to the cancellation of flights and reduction in industrial activity.
The country had consumed 19.5 million tonnes of petroleum products in March 2019, official data showed. Assuming consumption in two halves of the month was almost the same, as much as 10 million tonnes of fuel was consumed during the first fortnight of March 2019.
“The petroleum industry is witnessing the impact of coronavirus on sales of all petroleum products. The overall demand for liquid fuels has gone down by 10-11 per cent in the first fortnight of March 2020,” said Indian Oil Corp (IOC), the country’s largest fuel retailer, in a statement.
Restrictions and travel advisories, as well as a slowdown in industrial activity, has led to the fall in demand.
While diesel sales as dropped by over 13 per cent, jet fuel sales have slumped by over 10 per cent. Petrol sales have seen a decline of over 2 per cent.
“Due to restriction in movement and travel advisories, the aviation turbine fuel (ATF) sales have dropped by over 10 per cent. The bunker fuel sales are also down by approximately 10 per cent,” IOC said.
The airlines industry accounts for 6-8 per cent of total crude consumption. As more countries are implementing bans over Covid-19 in both international and domestic travel, the impact is likely to worsen. And if the pandemic is not contained over the next two-three months, the consequences will be severe.
Covid-19 is further drying up demand from the road transport and airlines segments in India as well. Consumption growth of petroleum products is expected to be low at 2-3 per cent in fiscal 2021. Separately, Morgan Stanley has cut India’s fuel demand estimate for the next financial year by five per cent.