India’s consumption of petroleum products in August rose 16.3 percent year-on-year to 17.81 million tonne, according to data released by the Petroleum Planning and Analysis Cell of the oil ministry. The increase was largely driven by higher transportation fuel demand. In the yearago period, petroleum product sales were subdued as the country was just emerging from the devastating second wave of the COVID-19 pandemic.

Sequentially, however, consumption of petroleum products was higher by just 1.1 percent in August, as monsoon rains dented diesel demand. Fuel consumption usually drops a bit during the rainy season as demand from sectors such as transportation, agriculture, construction, and road building gets suppressed to an extent in large parts of the country.

Consumption of petroleum products is seen as a proxy for oil demand. Demand for petroleum products has been robust in the country ever since COVID-related curbs were withdrawn. Petrol and diesel consumption in India, the world's third largest consumer of crude oil, are back at pre-pandemic levels. In August, diesel consumption rose 13 percent on year to 6.34 million ton Sequentially, diesel consumption was down 4.5 percent. Diesel accounts for close to 40 percent of the total volume of petroleum products consumed in India.

 Petrol consumption rose 11.6 percent on year to 3.01 million tonne in August. Sequentially, it was up 7 percent. The share of petrol in India's petroleum products consumption pie is around 17 percent. Consumption of the two transport fuels in August was in line with public sector fuel retailers' petrol and diesel sales reported earlier this month. These companies together have a market share of over 90 percent in the fuel retail segment.

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