Indian oil demand eased m/m in July to 4.29 mb/d but stayed higher y/y by 0.29 mb/d. Uneven rainfall over July, leading to floods in west India, hit gasoline and diesel demand, resulting in high diesel exports. Gasoline demand eased from June’s record high to 0.64 mb/d in July but was 46 thousand b/d higher y/y. Passenger vehicles sales rose by 13.3% y/y, while two-wheeler sales rose by 10% y/y as rising rural incomes and availability of more affordable models continue to support demand. Diesel demand also eased seasonally m/m from June’s record to 1.6 mb/d but was still up by 74 thousand b/d y/y. The combination of floods in major cities (shutting factories, schools, offices), and droughts in some rural areas, hit diesel and gasoline demand. Jet/kero demand rose by 13 thousand b/d to 0.24 mb/d. Official data show over 68 million passengers flew domestically in India in H1 18, up y/y by 22%. Naphtha demand rose by 0.13 mb/d y/y to 0.33 mb/d on a very low base. LPG demand recovered to 0.78 mb/d (+44 thousand b/d y/y), with demand aided by government price controls on subsidised cylinders to shield poor households.
Refinery runs remained elevated at 5.3 mb/d in July (+0.44 mb/d y/y). However, we expect runs to fall in August as BPCL’s 0.24 mb/d Mumbai refinery had to cut runs by 50% after a major explosion at its 45 thousand b/d hydrocracker. The facility will likely continue to run at turndown rates until the unit is restarted. BPCL will be short product as its joint-venture 0.12 mb/d Bina refinery was forced to bring forward a planned 45-day full-plant TAR to mid-August after a 6 August fire at its 27 thousand b/d coker. An outage at Reliance’s massive 0.22 mb/d FCC added to the outages. The largest gasoline export markets for Reliance are the Middle East and the US.