India's crude oil demand last year fell for the first time in more than 20 years because of the Covid-19 pandemic, Bloomberg has reported, noting that Asia's second-biggest oil importer was expected to report its biggest GDP contraction since records began in the early 1950s.
Like most of the world, India implemented strict lockdowns in response to the first wave of infections last spring, which resulted in a 70-percent drop in crude demand. Refineries cut processing rates, and imports declined sharply.
Even so, the Asian powerhouse remains one of the main global drivers of future oil demand, together with neighbor China. In fact, BP last year said in its Energy Outlook 2020 that India will be the source of the biggest energy demand growth until 2050. However, consumption of crude oil may peak as soon as 2025, the supermajor also said in its outlook.
Right now, things are looking up for oil sellers: after the end of the lockdowns in India, businesses began reopening, the economy started to pick up, and oil demand rose, driven, among other things, by stronger car sales as people opted to travel by personal transport rather than the transit network amid the continuing pandemic.
"Gasoline has already crossed the pre-COVID-19 levels, and diesel too is edging towards pre-COVID-19 levels. The festive season would give a further boost to the demand," Shrikant Madhav Vaidya, chairman of India Oil Corp., said at the India Energy Forum in late October.
By November, India had once again become one of the fastest-growing markets for fuels. Refineries operated by Indian Oil Corp. cranked up processing rates to 100 percent in response to this development, as did other refiners.
Last month, gasoline consumption in India went up by 9.3 percent on the year, Bloomberg reported, even though diesel fuel demand was lower than a year earlier. Total fuel consumption for the month was 1.8 percent lower than in December 2019 but the highest since February, the report also noted.
By Charles Kennedy for Oilprice.com
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Comments
China and India were the two major crude oil consumers who managed to restore their oil demand in 2020 to 2019 levels. In fact, China’s oil demand in 2020 was 10% higher than 2019.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London