India's diesel consumption expected to rise 3%-4% in FY25: IOC Chairman

The arrival of the monsoon in July caused diesel demand to drop due to heavy rains in various parts of India

India’s diesel consumption is projected to increase by 3-4 per cent in the current financial year, V Satish Kumar, Chairman of Indian Oil Corporation (IOC) told journalists on Wednesday on the sidelines of an event organised by the World Biogas Association. This would mark a turnaround from the slowdown in diesel demand over the past few months. The drop in demand was attributed to weather conditions, particularly heavy rains earlier in the year.

“There will be a pick-up in diesel consumption from October as rains have stopped and crop harvesting has begun,” Kumar said.

Diesel demand in India rose by 1 per cent in the first half of FY25, from April to September, reaching 44.4 million tonnes, according to government data, as cited by Reuters. However, rainfall significantly impacted the movement of trucks, causing a brief dip in consumption.

 

Diesel is a crucial fuel for India, powering transportation and the agricultural sector. According to data platform Statista, diesel consumption in 2023 was recorded at 107 billion litres, with projections suggesting it could reach an all-time high of 110.14 billion litres by 2024.

Seasonal fluctuations in diesel demand

Diesel consumption saw notable highs and lows throughout 2024. In May, diesel consumption hit a record 8.4 million tonnes, driven by political campaigning and increased travel during summer vacations. However, the arrival of the monsoon in July caused demand to drop, with diesel consumption declining by nearly 10 per cent year-on-year to 7.19 million tonnes.

This downward trend continued into August and September, where consumption fell by 2.5 per cent and 2.06 per cent, respectively, due to excessive rains that curtailed transportation and agricultural activities. In contrast, the aviation sector experienced a recovery, with aviation turbine fuel (ATF) consumption rising during this period, indicating resurgence in air travel.

With the monsoon season now over, and the agricultural harvest underway, diesel demand is expected to recover in the coming months.