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It’s going to take months for oil demand in the world’s third biggest market to get back to pre-virus levels as India faces its deepest recession ever in the wake of its near two-month lockdown.
Once the engine of global oil demand growth, India’s fuel consumption collapsed by as much as 70% at one stage last month as it embarked on one of the world’s most stringent nation-wide quarantines. As the lockdown eases, it’s now running at about 40% below last year’s levels and could take until the end of 2020 to get close to full recovery, according to executives at the country’s state-owned fuel retailers.
The stuttering rebound in India’s oil use stands in contrast to China’s, where demand is all but back at levels last seen before Beijing imposed a lockdown to fight the coronavirus outbreak. That’ll temper some optimism around a faster-than-expected tightening of the oil market that’s helped push prices back to $35 a barrel.
“Demand is reaching 60% to 70% of normal, but it will take some time to get to pre-Covid sales,” said Mukesh Kumar Surana, chairman of Hindustan Petroleum Corp. “Over a period of two to three months, we should get back to 80% of normal sales. Beyond that, it will be slow.”
The country consumed about 4.6 million barrels a day in May last year, which means demand probably stands at about 2.8 million barrels a day now, according to data compiled by Bloomberg, based on estimates by the executives. Gasoline demand is still about 47% below the same time last year, while diesel consumption is about 35% lower, they said. Jet fuel was still a massive 85% weaker, they said.
Vehicles used to queue up outside Ajay Bansal’s gas station in Delhi’s bustling heart all day. But since Prime Minister Narendra Modi imposed the world’s most disruptive stay-at-home order on March 25, he says his customers more or less vanished.