Published on 12/11/2019 8:37:14 AM | Source: Reuters

IOC expects diesel demand to recover in six months

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By Stanley Carvalho

ABU DHABI - India's diesel demand is expected to recover in the next six months as a longer-than-usual monsoon season that affected transportation and industry has ended, the chairman of top domestic refiner Indian Oil Corp (IOC) said on Monday.

Diesel consumption usually tapers in monsoon season as rains hit construction and mobility. Any longer-term slowdown in fast-growing India's fuel use could dim prospects for global oil demand.

"Fuel demand, especially diesel, is falling ... In (July-September) normally demand is low because of monsoons, excess rain and floods," Indian Oil's Sanjiv Singh said.

India's fuel demand fell to its lowest in more than two years in September, with consumption of diesel at its weakest since January 2017.

"It is a temporary slowdown," said Singh, who was in Abu Dhabi to attend an energy conference.

State-owned refiners, such as IOC, Bharat Petroleum Corp and Hindustan Petroleum Corp, traditionally buy fuel from private companies to meet demand at the pump.

But falling local demand for diesel, which accounts for about two-fifths of overall fuel consumption, is prompting state refiners to export the product.

Singh said that in the current fiscal year to March, IOC's diesel exports could be more than before because of the slowdown in consumption. He did not elaborate.

Bharat Petroleum will export about 200,000 tonnes of diesel every month between November and March, its head of finance N. Vijayagopal said last week.

IOC accounts for about a third of India's refining capacity of 5 million barrels per day.

Singh also said his company was looking at buying Russian oil.

(Reporting by Stanley Carvalho; Editing by Dale Hudson)