India's Fuel Sales Surge in August Driven by Erratic Monsoon and Shift to Piped Gas

Petrol and diesel sales by India's three state-run fuel retailers surged in August, according to preliminary industry sales data released on Tuesday. The increase in fuel demand was primarily driven by erratic monsoon rainfall, which boosted requirements from both farmers and motorists.

Petrol sales by Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL), and Hindustan Petroleum Corp Ltd (HPCL) rose by 9.1 percent to reach 3.48 million tonnes in August. This compares to 3.19 million tonnes sold during the corresponding period a year ago. This growth follows a 9.7 percent year-on-year increase recorded in July.

The August volume was also 14 percent higher than the 3.05 million tonnes sold in August 2024, and 30.7 percent above the level recorded during the same period in 2023. On a month-on-month basis, petrol sales increased by nearly one percent from 3.45 million tonnes.

Diesel sales, which serve as a key indicator of economic activity in India, rose 10.2 percent year-on-year to reach 6.27 million tonnes in August, up from 5.69 million tonnes a year earlier. This marks the second consecutive month of double-digit growth in diesel demand, following a 10.7 percent increase in July.

As India's most widely used fuel, diesel powers freight transport, agricultural machinery, and irrigation. Industry data indicates that erratic monsoon rainfall boosted irrigation demand during the peak sowing season. Typically, fuel sales moderate with the onset of the monsoon as the demand for running agricultural irrigation pumps decreases and vehicular movement slows down. However, the late arrival of monsoon rains this year led farmers to rely on diesel-powered pumps to irrigate their fields.

Despite the year-on-year growth, diesel sales fell 12 percent month-on-month from 7.13 million tonnes in July.

Meanwhile, sales of aviation turbine fuel (ATF), or jet fuel, rose by 5.6 percent to 677,100 tonnes in August. This volume represents a 5.9 percent increase compared to the 639,700 tonnes consumed in August 2024, and a 17.7 percent rise from 575,400 tonnes in August 2023. On a month-on-month basis, jet fuel consumption increased by 1.3 percent from 668,500 tonnes in July.

In contrast, liquefied petroleum gas (LPG) sales continued to decline, dropping 16.1 percent to 2.42 million tonnes in August, following a 17.4 percent fall in July. Industry officials noted that this trend is largely due to some volumes shifting to piped natural gas following disruptions caused by the West Asia crisis.

LPG sales have faced downward pressure since the crisis disrupted supplies and led to consumption restrictions in sectors such as hotels and restaurants. Although these curbs were lifted in June—resulting in an 8.6 percent sales increase to 2.18 million tonnes—year-on-year figures remain lower as industrial and commercial users continue to adopt piped natural gas for their energy needs.

August LPG consumption remained 12.6 percent lower than the 2.77 million tonnes recorded in August 2024, and 0.3 percent lower than the 2.43 million tonnes in August 2023. On a month-on-month basis, LPG sales rose 2.2 percent from 2.37 million tonnes.

"The recent data on fuel consumption highlights how weather anomalies directly impact industrial demand and agricultural supply chains in India. The surge in diesel and petrol sales demonstrates the heavy reliance on traditional fuels during delayed monsoons, while the shift from LPG to piped natural gas among commercial users indicates structural changes in energy consumption patterns driven by supply chain shifts." — Dr. Shishir Gupta, Founder & CEO, StartupLanes