Signs have already started to emerge that India’s COVID crisis has hit oil demand in the world’s third-largest oil importer, but now sources say that demand for liquefied natural gas (LNG) is also down due to the health emergency, and cargoes headed for the virus hotspot are being turned around.
Shippers are diverting LNG cargoes away from Indian terminals because of lower demand for gas, shipping and trade sources told Reuters on Monday.
Localized lockdowns are depressing demand for gas for commercial and transportation in India, according to traders.
Ship-tracking data from Refinitiv Eikon and Kpler, cited by Reuters, suggests that India’s imports of LNG declined by 11-14 percent in April compared to March.
“Gas demand from city-gas distribution such as transport and commercial sectors is down, and gas-based power demand is not much as spot prices have not come down to acceptable levels,” an India-based source told Reuters.
India has been reporting record-high new COVID infections these days, and despite the dire situation, the Indian government is not willing to impose a new nationwide lockdown as it did in the spring of last year, fearing that the economy would collapse.
The record new daily coronavirus cases, however, have prompted lockdowns in major cities and states in India, which has already led to declining fuel sales.
Sales of gasoline in India were the weakest in April since August 2020, officials with knowledge of preliminary data told Bloomberg. Average daily sales of diesel, the most used fuel in the country, slumped in April to the lowest level since last October, according to the preliminary estimates.
India’s demand for diesel, gasoline, and jet fuel is expected to further decline in the coming days and probably weeks, with no sign that the second COVID wave in the country would peak within days.
The market fears that the drop in Indian demand would slow down global oil demand recovery.