India oil industry struggles to predict when demand will recover

Indian energy demand is taking a big hit as Covid-19 runs rampant across the country. But uncertainty around when the virus wave will subside and the lack of a unified government response has left the oil industry in the dark as to how quickly consumption might pick up again.

The demand destruction over the last couple of months has been less severe than last year, when the government imposed the world’s biggest national lockdown. However, the lack of a coordinated effort to shut down activity to halt the virus’s spread will likely lead to a longer, although less pronounced, economic slump.

“When it will return to normalcy is a very difficult question to answer,” said Shrikant Madhav Vaidya, chairman of Indian Oil Corp., the country’s biggest refiner. “We can only hope and pray that with the vaccination drive underway, things will come out well. But when, I don’t know.”

Unlike last year, Prime Minister Narendra Modi hasn’t imposed a countrywide lockdown. States have been left to fend for themselves, leading to a patchwork of curfews and restrictions that are being constantly extended as record infections and deaths overwhelm hospitals and crematoriums.

“We hope the situation will be clearer by the end of this month or the first week of June,” said Mukesh Kumar Surana, chairman of Hindustan Petroleum Corp. Demand should be better in the quarter through September, he said.

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