India’s demand for petroleum products is likely to experience an upswing in the financial year ending in March 2024, according to Fitch Ratings. The agency predicts a mid-single-digit percentage increase, driven by a post-pandemic recovery in 2022-23. During the first nine months of 2023-24, there has already been a robust growth in petrol and diesel sales, primarily due to buoyant economic activities in the agriculture and power sectors. Additionally, increased holiday travel and auto sales have contributed to the surge in demand. Fitch Ratings also mentions that Indian refiners’ gross refining margins (GRM) are expected to moderate in 2024-25 but will remain above mid-cycle levels. Beyond that, a shift closer to mid-cycle levels is projected for 2025-26, with the demand for end-products playing a crucial role in maintaining the resilience of GRMs. While the supply mix away from Russian imports may narrow GRMs, the agency believes that margins will stay strong due to the rising demand for end-products. Moving to the upstream segment, there has been a modest increase in domestic oil and gas production, particularly gas production, which rose by 5% in the first nine months of 2023-24. Fitch Ratings expects this upward trend to continue moderately as technological investments in enhanced oil recovery techniques offset natural declines. The agency also anticipates a continuation of high capex intensity in the oil and gas sector, with focus on production enhancement. In the downstream segment, Hindustan Petroleum Corporation Limited is likely to maintain higher capex due to planned investments by its subsidiary, HPCL Rajasthan Refinery Limited. However, other oil marketing companies, including HPCL-Mittal Energy Limited, are expected to have minimal capex as their expansion projects have been completed. India, being the world’s third-largest oil importer and consumer, heavily relies on crude oil from various sources in the global market to meet its domestic demand.