Total consumption of refined products fell 6.5% in May, from a year earlier, to 19.93 million metric tonnes, according to oil ministry data. The month saw subdued growth in transportation fuels sales- petrol was up 3.3% and diesel grew 1.5% while aviation turbine fuel (ATF) was flat. Sales of other products such as naphtha (29%), LPG (20.5%), bitumen (39.4%) and petcoke (11.3%) fell sharply.
Petrol and diesel sales increase in May was around half the average growth recorded for the two fuels in FY26.
Slowing fuel consumption is an indicator of weakening economic activity, said an industry executive.
Alt Fuel Use on the Rise
While softer diesel demand reflects sluggish activity in the transportation sector, lower bitumen consumption signals slow pace of road construction. Decline in naphtha and petcoke usage suggests tepid industrial activity, especially as alternative fuels such as natural gas have also become expensive and are seeing weak demand, the executive said.
The near closure of the Strait of Hormuz and import curbs are at the heart of the slowdown in fuel consumption, a second executive said.“Supplies of LPG, bitumen, and petcoke from the Gulf region have been disrupted,” the executive said. “To compensate for lower LPG imports, domestic refiners are maximising LPG output, resulting in changes in the yield pattern of other petroleum products.”
More naphtha is being diverted to boost LPG production, he said, while lower naphtha availability is driving consumers towards fuel oil, a cheaper alternative whose consumption rose 24% in May.
Industry executives said a sharp rise in bulk diesel prices—about Rs 50 per litre compared with Rs 8 per litre for retail diesel—may also have curbed consumption as users sought alternatives or improved efficiencies.
Higher prices at pumps run by private fuel retailers Nayara Energy and Shell also reflected on India’s subdued petrol and diesel sales in May, executives said. Sales at private retailers declined, while rising at pumps run by state-run refiners.
Meanwhile, higher ATF prices prompted airlines to cut several flights, keeping national consumption flat last month.