Kpler and Rystad Cut India Oil Demand Growth Forecasts to Pandemic Lows as Hormuz Supply Shock Drives Price-Based Conservation

Kpler cut its forecast for India's total refined product demand growth in 2026 by 39%, lowering the estimate from 128,000 barrels per day to 78,000 barrels per day. Rystad Energy has moved further, cutting its Indian diesel consumption growth estimate by more than 90% to a range of just 4,000 to 5,000 barrels per day. Both firms now project India's demand growth at its weakest since the Covid pandemic, according to OilPrice.com reporting published Wednesday.

Three Forces Behind India's Demand Slowdown

Kpler analyst Elif Binici attributed the demand weakness to three compounding forces: rising crude import costs, rupee depreciation, and growing under-recoveries at state-run fuel retailers. The Hormuz closure drove up crude import costs for Indian refiners, while rupee weakness amplified the local-currency cost of imported oil. Under-recoveries arise when state retailers sell fuel below import cost, creating financial stress and incentives to limit supply volumes. Policymakers responded by intensifying "fuel-conservation messaging," per Binici's analysis cited by OilPrice.com. Those combined pressures have pushed India's demand growth to rates comparable to the 2020 pandemic period, when Indian mobility and industrial activity contracted sharply.

Kpler vs. Rystad: A Diesel Divergence of Roughly 37,000 bpd

Kpler's revised diesel demand growth estimate of 42,000 barrels per day and Rystad's estimate of 4,000 to 5,000 barrels per day represent a gap of roughly 37,000 to 38,000 barrels per day on the same metric. Expressed as a share of Kpler's diesel forecast, Rystad's midpoint of 4,500 barrels per day is about 11% of Kpler's 42,000 bpd figure. That divergence is wider than the aggregate numbers suggest, because Kpler's 39% total cut masks a proportionally much larger revision in the diesel component. The gap implies significant uncertainty in how deeply price-driven conservation will cut into India's industrial and transport diesel demand.

The Gasoline-Diesel Breakdown

Kpler's revised breakdown shows gasoline demand growth cut 40% to 38,000 barrels per day, and diesel growth cut 30% to 42,000 barrels per day. Together, those two product categories account for most of the 78,000 bpd total revised growth estimate. Rystad's diesel-specific figure of 4,000 to 5,000 barrels per day implies a much sharper correction to diesel than Kpler assigns, possibly reflecting the state-retailer constraint that disproportionately affects diesel pricing in India. India's state retailers set diesel prices administratively, making diesel more exposed to under-recovery pressure than gasoline, which is priced more freely.

India's Role in the Global Demand Outlook

India has been a primary driver of global oil demand growth in recent years, with consumption expanding as industrial output and vehicle ownership rose. A slowdown to pandemic-era growth rates removes a support pillar from the global demand outlook at a time when Gulf supply disruptions are already tightening markets. If Rystad's more cautious diesel view proves correct, India's contribution to 2026 global demand growth could underperform broader consensus forecasts. Demand analysts for the 2026 oil market will need to reconcile the Kpler-Rystad gap to produce reliable price outlook models.