India's fuel consumption surged to a six-month high in November, painting a vivid picture of a recovering economy. The world's third-largest crude oil importer witnessed a significant boost in fuel demand, signaling robust activity in construction and agriculture after the monsoon season. But this rise brings with it a complex web of international relations and supply chain challenges. Let's dive in.
India's total fuel consumption reached 21.27 million tons in November, marking a 3% increase year-over-year and the highest level since May 2025, according to data from India’s Petroleum Ministry.
While gasoline demand dipped slightly from the festive month of October, it still remained 2.6% higher compared to November 2024. The real story, however, lies in diesel consumption. Diesel, the most widely used fuel in India, saw a substantial jump to 8.55 million tons in November, reflecting a 12.2% increase from October and a 4.7% rise compared to November 2024.
Now, here’s where things get interesting: With this surge in fuel consumption, India faces the challenge of sourcing crude oil, particularly given the sanctions on Russian oil giants Rosneft and Lukoil. The decline in crude oil imports from Russia might be short-lived, as Russia intends to increase supply despite Western sanctions, according to Kremlin spokesman Dmitry Peskov.
Before the sanctions, India sourced about one-third of its crude oil from Russia, attracted by its competitive prices. This decision, however, drew criticism from the United States, with former President Donald Trump singling out India as a key financier of Russia's oil revenues. India, however, maintained its stance on purchasing the most affordable oil, regardless of its origin.
But here's where it gets controversial... The U.S. sanctions on Rosneft and Lukoil disrupted the plans of Indian refiners, who swiftly withdrew from the spot market for Russian crude in December. However, reports emerged last week that India’s Bharat Petroleum and India Oil Corporation have secured Russian crude from non-sanctioned companies for January delivery, at a discount of $6-$7 to Brent crude.
What do you think? Does India's approach to sourcing oil reflect a pragmatic strategy, or does it come at a cost? Share your thoughts in the comments!
