Demand for jet fuel in India up, tightens Asian, European aviation fuel market

jet fuel
An expanding middle class in India means more people are flying to their destinations, boosting demand for jet fuel to record highs this year.  India Times photo.

An expanding middle class in India means more people are flying to their destinations, boosting demand for jet fuel to record highs this year.  India Times photo.

Indian government’s infrastructure overhaul has boosted demand for jet fuel

The ambitious plans of India’s government to overhaul the country’s infrastructure, including a push to build airports, has resulted in more people flying to their destinations which has also boosted the south Asian country’s demand for jet fuel to record highs.

The Indian economy has been expanding rapidly in recent years and with it, the country’s middle class.  India is now the world’s fasted growing major domestic aviation market, according to the International Air Transport Association.

With the growth air travel in India, the country’s refiners are not likely to send their cargoes abroad which will tighten jet fuel markets in Asia and Europe.

“The country’s air transport sector has huge potential to grow in the long-term given its large geographical expanse and growing consumer affluence,” Sri Paravaikkarasu, a Singapore-based analyst at energy consultancy FGE told Reuters.

In January and February of this year, air traffic in India rose to 22.2 million passengers, up by 22 per cent over the same period in 2017.

With the increase in air travel, FGE predicts Indian demand for jet fuel will rise by 10.5 per cent year-on-year and energy consultancy Trifecta says it forecasts a growth of 12 to 15 per cent.

During the first three months of the year, India used 2.02 million tonnes of jet fuel, up 9.4 per cent from a year earlier, according to government data.

Refiners, including Reliance Industries and Essar Oil, are traditionally exporters of jet fuel and India is one of the top three Asian suppliers of jet fuel, according to Thomson Reuters data.

However, with booming growth in the airline industry, exports are sure to slow.  In 2017, exports are down over 7 per cent, year-on-year.

“Domestic demand growth will certainly limit its ability to service other markets in the region,” Emma Richards, a senior oil and gas analyst in London at BMI Research told Reuters.

Indian refineries are expanding to handle the increased growth.

In April, Ratnagiri Refinery & Petrochemicals signed an initial deal with Saudi Aramco to build a refinery in the western state of Maharashtra.  The operator of the world’s largest refinery, Reliance Industries, says it plans to expand its oil processing capacity by over 40 per cent by 2030.




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