<article><p><i>Adds comment from Pradhan in paragraph 6, demand figures in paragraphs 9-10</i></p><p class="lead">Indian state-controlled refiners have continued to increase run rates as many parts of the country slowly emerge from strict lockdowns following a slump in new Covid-19 cases.</p><p>Many states have eased lockdowns with the rate of daily new cases of around 50,000 falling from a record of more than 400,000 cases in early May. But restrictions remain in place on increased concerns about the Delta Plus coronavirus variant.</p><p>The country's biggest state-controlled refiner IOC is operating its 1.34mn b/d of capacity at 88-90pc, a source familiar with plant operations said. The rate is at least three percentage points higher than earlier this month.</p><p>Bharat Petroleum (BPCL) has been operating its 240,000 b/d Mumbai and 310,000 b/d Kochi refineries at 85-90pc capacity, while run rates at fellow state-controlled refiner MRPL's 300,000 b/d Mangalore refinery have increased by 10 percentage points to 85pc, sources said.</p><p>MRPL will continue to operate at around 85pc capacity in July, another source close to the company told <i>Argus</i>.</p><p>Indian oil demand has shown signs of a resurgence in the last three weeks as economic activity picks up and is likely to return to pre-pandemic levels by the end of this year, oil minister Dharmendra Pradhan said at a BNEF summit in Delhi today.</p><p>The increase in run rates comes despite higher retail motor fuel prices as refiners anticipate that demand will recover in the coming months. The sentiment was reflected in a <a href="https://www.argusmedia.com/en/news/2227019-driving-activity-in-india-picks-up-pace">pick-up in driving activity this month</a> and <a href="https://direct.argusmedia.com/newsandanalysis/article/2225196">higher diesel and gasoline consumption</a> in the first half of June.</p><p>Retail gasoline prices are at 104.90 rupees/litre ($1.41/l) in Mumbai today after rising past the three-digit mark for the first time earlier this month, while diesel is being sold at Rs96.72/l. Prices have gone up in line with higher global crude oil prices and domestic taxes, which make up 60pc of the retail prices.</p><p>Indian diesel consumption rose to 1.23mn b/d in the first half of June from 1.1mn b/d a month earlier, although it is still well down on levels of 1.57mn b/d in the first half of June 2019, before the pandemic, according to data from state-controlled refiners that account for around 90pc of the country's fuel sales. </p><p>Gasoline demand reached 510,000 b/d in the first half of this month, up from 450,000 b/d but below 643,000 b/d during the same period in 2019. </p><p class="bylines">By Sathya Narayanan, Sarah Giam and S Dinakar</p></article>
