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India's April fuel demand slipped from the previous month as the world's third largest oil consumer bore the brunt of raging coronavirus infections, with the prospect of further restrictions weighing on the outlook.

Consumption of fuel, a proxy for oil demand, fell 9.4% to 17.01 million tonnes from March, data from the Petroleum Planning and Analysis Cell (PPAC) of the Ministry of Petroleum & Natural Gas showed on Tuesday.

On a yearly basis, demand surged 81.5% from April 2020 lows, when consumption plunged to the lowest since 2006 as coronavirus restrictions during India's first wave battered the economy. This represents the biggest year-on-year increase since data going back to about 1999.

"India's second wave of virus infections and varying containment measures provides an uncertain outlook for the fuel demand," Edward Moya, senior market analyst at OANDA said.

India is nearing 400,000 infections a day and the second surge has increased calls for a nationwide lockdown and forced many states to impose tougher restrictions.

Prime Minister Narendra Modi's resistance to a full lockdown has supported consumption in the short-term, Moya said.

Fuel demand had reached pre-pandemic levels of around 18.8 million tonnes in March, the highest level since end-2019.

GRAPHIC: India's April fuel demand hit by second COVID-19 wave https://graphics.reuters.com/INDIA-FUEL/SALES/qmypmeambpr/chart.png

However, the pandemic has led the country's top state oil refiners to reduce processing runs and crude imports, company officials told Reuters on Tuesday.

This trend is likely to extend into May as Indian refineries are reducing their refinery runs, UBS analyst Giovanni Staunovo said, adding that once mobility restrictions were lifted, demand should recovery swiftly.

Diesel consumption, a key parameter linked to economic growth in India, fell 7.5% to 6.68 million tonnes from the previous month, but surged 105.5% year-on-year.

Gasoline, or petrol, sales fell 13.1% to 2.38 million tonnes in April- the lowest level since August 2020, and were 145% higher compared with same period a year ago.

GRAPHIC: India's diesel, gasoline sales dip in April https://graphics.reuters.com/INDIA-FUEL/SALES/azgvognwxvd/chart.png

(Reporting by Swati Verma; Editing by Susan Fenton and Alison Williams)