India’s crude oil demand is about to add 4% during the final quarter of the year amid a festival season that also coincides with increased agricultural activity after the monsoon season.
The forecast comes from S&P Global Commodity Insights, which said that it expected India’s fuel demand to rise by between 50,000 and 55,000 barrels daily of gasoline and diesel in the period between November and December.
The pickup in demand follows depressed fuel consumption during the monsoon, as the rains affected transport and construction activity, the Economic Times noted in a report on the oil demand outlook for the country.
The depression in consumption, however, was only discernible in diesel fuel, the report also noted, with that shedding less than 2% during the June-September quarter. Gasoline demand, on the other hand, expanded by 3% during the monsoon.
India is one of the largest consumers of crude oil and due to limited domestic supply, it is also one of the biggest importers. As much as 85% of the subcontinent’s consumption is covered by imported oil.
That consumption is moving higher and growing in lockstep with the economy and refinery expansion plans.
Over the past two years, India has become a key buyer of Russia’s oil, which is selling at a discount because of the sanctions and embargoes on Russian crude exports to Western countries.
The attractiveness of cheaper crude supply has made Russia the single biggest supplier of oil to India, especially as New Delhi plans a significant expansion in domestic refining capacity.
By 2028, plans are to boost refining capacity by 20% to a total 6.19 million barrels daily in order to meet rising fuel demand in the medium term. According to OPEC, India will remain the world’s biggest driver of oil demand growth well into the 2040s as well, with demand rising by 6.6 million bpd over the period until 2045.
By Irina Slav for Oilprice.com
