India's oil demand growth forecast has been significantly reduced to its lowest point since the pandemic, with analysts citing supply issues and elevated fuel prices. Concurrently, the nation is expanding its E85 fuel stations to 500 by year-end, a move anticipated to accelerate adoption due to lower costs and support efforts to cut oil imports and emissions. In refining, Nayara Energy has finished maintenance at its 400,000-barrel-per-day facility, aiming to increase domestic fuel supply ahead of potential EU sanctions. Separately, satellite data suggests a slowdown in Indian industrial activity, linked to the conflict involving Iran, evidenced by decreased nitrogen dioxide emissions.
India's oil demand growth forecast for the current year has been substantially lowered, with projections now indicating the weakest expansion since the COVID-19 pandemic. Analysts attribute this downward revision to a combination of supply constraints and elevated fuel prices, which are dampening demand for gasoline and diesel. Both Kpler and Rystad Energy have revised their growth forecasts for gasoline and diesel demand downwards by a significant margin, ranging from 30% to 90%.
In parallel, India is actively promoting alternative fuels, with plans to expand its E85 fuel stations to approximately 500 by the end of the year, a substantial increase from the current roughly 50 stations. Minister Hardeep Singh Puri expressed optimism that E85 adoption will outpace that of E20, primarily due to E85's more affordable price point. This initiative is part of a broader strategy to reduce the country's reliance on oil imports and to curb vehicular emissions.
Meanwhile, Nayara Energy, a prominent Indian refiner, has successfully completed scheduled maintenance at its Vadinar refinery. This facility boasts a capacity of 400,000 barrels per day and processes Russian crude oil. The refiner intends to increase its domestic fuel supply following the maintenance period, a move aimed at mitigating potential impacts from European Union sanctions that are slated to begin in the summer of 2025.
Further complicating the economic landscape, satellite data analysis conducted by NDTV Datafy points to a slowdown in industrial activity across India. The analysis observed reduced nitrogen dioxide emissions in at least four major industrial clusters. This industrial slowdown is reportedly linked to the ongoing conflict involving Iran, suggesting potential ripple effects on India's manufacturing and energy sectors.
India's oil demand growth forecast for the current year has been substantially lowered, with projections now indicating the weakest expansion since the COVID-19 pandemic. Analysts attribute this downward revision to a combination of supply constraints and elevated fuel prices, which are dampening demand for gasoline and diesel. Both Kpler and Rystad Energy have revised their growth forecasts for gasoline and diesel demand downwards by a significant margin, ranging from 30% to 90%.