Petroleum product consumption growth slows in 2025: ICRA Vice President - The HinduBusinessLineSENSEX 85,408.70 -116.14NIFTY 26,142.10 -35.05CRUDEOIL 5,280.00+ 26.00GOLD 138,095.00+ 210.00SILVER 222,351.00+ 2,698.00SENSEX 85,408.70 -116.14NIFTY 26,142.10 -35.05NIFTY 26,142.10 -35.05CRUDEOIL 5,280.00+ 26.00CRUDEOIL 5,280.00+ 26.00GOLD 138,095.00+ 210.00'; } document.getElementById("lgdv").innerHTML = htmlElements; } function numberformat(i) { return Number(parseFloat(i).toFixed(2)).toLocaleString('en', { minimumFractionDigits: 2 }) } async function gatherResponse(response) { const { headers } = response; const contentType = headers.get('content-type') || ''; if (contentType.includes('application/json')) { return await response.json() } return response.text(); } function getWidth() { if (Math.max(document.body.scrollWidth,document.documentElement.scrollWidth,document.body.offsetWidth,document.documentElement.offsetWidth,document.documentElement.clientWidth) > 991) { document.getElementById("mob").style.display = "none"; document.getElementById("lgdv").style.display = "block"; } else { document.getElementById("mob").style.display = "block"; document.getElementById("lgdv").style.display = "none"; } } getWidth();]]>Prashant Vasisht, Vice President & Co-Group Head (Corporate Ratings), ICRAAs India pushes for higher consumption of clean energy products and services, the consumption growth of diesel and petrol is slowing down, which is expected to continue in 2026 as well.ICRA Vice President & Co-Group Head (Corporate Ratings) Prashant Vasisht breaks down the key trends re-defining the domestic oil and gas sector, including the evolving consumption matrix. Excerpts:What challenges were faced by the Indian oil and gas sector in 2025?First is the slowdown in consumption growth of petroleum products (POL). Consumption grew only 1.4 per cent year-on-year (y-o-y) in eight months of FY26, as against the historical growth rate of 4 per cent in the last 10 years. This is due to more fuel efficient vehicles, expansion of CNG network and electric mobility. Despite the weak growth in POL consumption, our dependence on imported crude increased. We broke the 90 per cent psychological barrier and now stand at about 91 per cent of the consumption being met by crude oil imports in seven months of FY26, which is due to decline in crude oil production and increase in consumption. Likewise, there is also a negative in the gas consumption growth this year. After many years, gas consumption has actually seen de-growth by about 4.5 per cent y-o-y in seven months of FY26. This was due to shutdowns at some fertilizer plants and weak power sector demand. Additionally, gas production has disappointed and has come down in seven months of FY26. There were significant expectations from the biogas sector; the government came out with several schemes. However, the ramp up in production has remained weak, with plants operating between 20 and 60 per cent capacity in FY26. Now, sizable capacities are being added in the sector, but regulatory intervention is required for ironing out pricing, infrastructure and taxation issues.What are the achievements of the sector this year?In April (2025), crude oil prices fell substantially due to unwinding of production cuts by OPEC+ amid slowing demand growth. Accordingly, Brent prices went down from about $77 a barrel as on March 31 (2025) to $65 by April 10. It has ranged between $60 and $70/barrel since then. So, one impact of lower crude oil prices was the increase in marketing margins of OMCs on petrol and diesel sales, which account for a substantial portfolio portion of their total sales. Retail prices have been stable for these products since March 2024, and so marketing margins have expanded. Additionally, there has been an ease in under-recoveries on domestic LPG sales due to decline in crude prices. Further, the government announced a ₹30,000-crore compensation package for the three PSU OMCs in August 2025 to address LPG under recoveries. Another important announcement was the unified tariff regime, announced recently, wherein a two-zone tariff was put in place, against the earlier three-zone tariff, which is a step towards ultimately simplifying tariffs, and ultimately heading towards a single tariff for the whole country. Another highlight is the discovery of large deposits in the Andaman Sea. There seems to be a lot of potential in this discovery. Lastly, OMCs are now more wary of the declining (consumption) growth rates. So, what we saw this year is that new refineries are being conceptualised with much larger petrochemical components, even as high as 40 to 50 per cent.What is your outlook for 2026?We expect crude oil price to average between $60 and $70 per barrel in FY27 due to muted global demand growth. This is also because of increasing electrification globally. Besides, crude supplies are also increasing with more supplies from non-OPEC producers. However, even at these levels, profitability of domestic crude oil producers is expected to remain healthy. We do not see a cut down in capex plans. Domestic POL consumption is expected to grow at only 1-2 per cent. Singapore GRMs are expected to remain in the range of $4-5 per barrel this year. Natural gas consumption is expected to grow in FY27 as against stable or de-growth in FY26.Published on December 24, 2025Sign into Unlock benefits!Access 10 free stories per monthAccess to comment on every storySign up/Manage to our newslettersGet notified by email for early preview to new features, discounts & offers${ ind + 1 } ${ device }Last active - ${ la }