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India fuel demand surges, refiners’ margins to stay strong, mid-single-digit growth in India’s petroleum products: Fitch
India’s demand for petroleum products is expected to increase by a mid-single-digit percentage in the financial year ending March 2024, following a 10 per cent post-pandemic recovery in 2022-23, according to Fitch Ratings, as reported by ANI.
Both petrol and diesel sales saw robust 4-6 per cent increases in the first nine months of 2023-24, driven by heightened economic activities in the agriculture and power sectors, as well as a surge in holiday travel and auto sales.
Fitch anticipates that Indian refiners’ gross refining margins (GRM) will moderate during 2024-25 from the strong levels expected in 2023-24 but will remain above mid-cycle levels. By 2025-26, a shift closer to mid-cycle levels is foreseen, with resilience bolstered by the escalating demand for end-products.
“The gradual normalisation of the crude supply mix away from Russian imports is likely to narrow GRMs, although we expect margins to stay strong, supported by the rising demand for end-products,” the rating agency said.
In the upstream segment, domestic oil and gas production has modestly increased, driven by a 5 per cent rise in gas production in the first nine months of 2023-24.
“We expect production to continue to rise moderately as technological investments in enhanced oil recovery techniques will offset natural declines,” the rating agency added.
Fitch forecasts that the oil and gas sector’s high capex intensity will continue in the medium term, particularly with upstream companies investing in production enhancement.
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