India’s Fuel Consumption Drops 6.5% In May Amid Price Hikes, Supply Disruption

India’s consumption of petroleum products declined by 6.5% in May, dropping to 19.93 million tonnes from 21.3 million tonnes a year earlier, according to data from the Petroleum Planning and Analysis Cell.

The contraction is reported amid elevated fuel prices and supply tightness in global markets due to the ongoing conflict in West Asia.

While overall consumption fell, there were notable divergences within product categories. The consumption of liquefied petroleum gas (LPG), widely used in households and industries, plunged by 20.5% in May compared with the same period in 2025, falling to 2.13 million tonnes from 2.68 million tonnes.

The sharp decline was linked partly to government demand‑management measures and adjustments in booking periods, which were extended from 21 to up to 45 days in rural areas, slowing off‑take.

In contrast, demand for petrol and diesel continued to grow, despite rising fuel costs, indicating sustained personal mobility and transport activity. Petrol consumption rose 3.4% to 3.9 million tonnes, while diesel usage increased 1.6% on‑year to 8.7 million tonnes.

Consumption of aviation turbine fuel (ATF), used by airlines, remained largely stable at 783,000 tonnes in May.

Other petroleum derivatives saw weaker demand: naphtha, a key feedstock for petrochemicals, declined by 29.4%, and bitumen used in road construction fell sharply by 39.4%, pointing to slower activity in related sectors.

Amid the supply crunch, Indian refiners have been encouraged to maximise LPG production to compensate for lower imports resulting from disruptions around the Strait of Hormuz.

The government has also reduced subsidised LPG refills under the Pradhan Mantri Ujjwala Yojana from nine to four annually as international LPG prices remain elevated.

The oil ministry said state‑run oil firms are facing under‑recoveries of about ₹700 per cylinder due to pricing pressures.

Exports of refined oil products also softened, averaging 937,000 barrels per day in May — a 3.6% decline from April — according to commodity analytics firm Kpler, reflecting weaker global demand and tighter supplies.