India’s fuel demand fell in August compared with the previous month, slipping to its lowest monthly level in roughly two years even as consumption of the country’s two most widely used transport fuels continued to rise on an annual basis. Total consumption of petroleum products, a proxy for oil demand in the country, came to 18.61 million metric tons for the month, according to data released by the Petroleum Planning and Analysis Cell of the oil ministry.
Measured against August last year, overall fuel consumption was down 2.8 percent, a decline driven largely by sharp falls in cooking gas and industrial feedstock use rather than any weakness in road transport. The month-on-month slide to a two-year low points to a softer pace of consumption growth even as the underlying transport fuel picture remained comparatively strong.
What Drove the Decline in India’s Fuel Demand
The fall in India’s fuel demand was concentrated in a small number of product categories rather than spread evenly across the fuel basket. Sales of liquefied petroleum gas, used mainly for cooking, dropped 17.2 percent from a year earlier to 2.35 million metric tons, extending a trend that has persisted for several months as households and industrial users increasingly shift toward piped natural gas and supply from West Asia remains under pressure. Naphtha sales fell even more sharply, down 22.3 percent to 0.83 million metric tons, reflecting weaker demand from petrochemical and fertiliser units that use it as a feedstock.
These declines were large enough to offset gains elsewhere in the fuel mix, pulling the headline consumption figure lower for the month even though the products that make up the bulk of daily fuel use in India told a different story.
Petrol and Diesel Sales Remain Resilient
Despite the overall decline, petrol and diesel sales, which together account for the largest share of India’s fuel consumption, posted solid annual growth in August. Gasoline sales rose 8.2 percent year on year to 3.84 million metric tons, while diesel consumption, the fuel most closely tied to freight movement, agriculture and industrial activity, increased 6.8 percent to 7.02 million metric tons. The strength in both fuels suggests that road mobility and logistics activity held up well during the month, even as broader consumption figures softened.
Sales of bitumen, used in road construction, rose 19.8 percent from a year earlier, pointing to continued investment in infrastructure projects, while fuel oil consumption edged up 4.8 percent. Both trends indicate that industrial and construction activity remained supportive of demand even as the headline oil demand figure declined.
Wider Context for Oil Demand
India is the world’s third largest consumer and importer of crude oil, making monthly fuel consumption data from the Petroleum Planning and Analysis Cell a closely watched indicator of both domestic economic activity and the country’s energy import needs. The August figures arrived at a time when global crude markets were already under pressure, with benchmark prices approaching 100 dollars a barrel amid heightened tensions in West Asia, a development that has raised concerns about India’s import bill and its knock-on effects on inflation.
Because India relies heavily on imported crude to meet its energy needs, shifts in domestic fuel demand carry implications well beyond the transport sector, influencing the country’s trade balance and its exposure to volatile international oil prices. The divergence seen in August, with steady growth in transport fuels alongside a marked pullback in LPG and naphtha, illustrates how uneven the recovery in different segments of the energy market has become, even as the overall consumption trend points to a broader cooling after a strong first half of the year.
Published in SouthAsianDesk, September 9th, 2026
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