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Matt Smith

Matt Smith

Taking a voyage across the world of energy with ClipperData’s Director of Commodity Research. Follow on Twitter @ClipperData, @mattvsmith01

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India's Rising Significance In Oil Markets

It is a quiet day in the oil market, with a wee bit of movement in the dollar offsetting the ongoing helium-like influence of OPEC. We get another set of weekly EIA inventory numbers tomorrow, but for now, hark: here are five things to consider in oil markets today.

1) Rosneft, with a group of investors, has struck a deal to buy Essar's Vadinar refinery - the second-largest in India. Rosneft, Russia's largest oil producer, is purchasing the 405,000 bpd refinery as it pursues a strategy attempted by other leading global producers: to set up roots in large, growing oil-consuming nations.

The port of Vadinar has five leading sources of waterborne deliveries; Iraq accounts for a quarter of volume this year, with Iran just behind at 23 percent. Venezuelan crude accounts for just under 20 percent, and with Nigerian and Kuwaiti volumes included, these five countries account for nearly 90 percent of flows into Vadinar this year.

2) As the graphic below illustrates (based on IEA data), India is projected to be the world's fastest-growing oil consuming nation through 2040. Granted, quite a bit can happen over the coming years to usurp this, but given India's population (hark, 1.3 billion people), its exceptionally low vehicle penetration rate (149 motor vehicles per 1000 people, compared to 781 in the U.S.), and its need to import the vast majority of the oil it consumes, it is set to remain an area for demand growth going forward.

(Click to enlarge)

3) Azerbaijan says it supports an OPEC / non-OPEC coordinated cut, and that it will not increase oil production. This is convenient, given that its September oil production is 10.2 percent lower than the prior month, and production of commercial oil was down 0.3 percent year-on-year. Related: Oil’s Biggest Threat: Demand To Peak Within 15 Years

4) While Iranian crude exports continue to remain strong to leading recipients China and India, our ClipperData below illustrate how exports into Europe continue to rise also. With crude discharged in 11 European destinations through September of this year, new countries are being added every month. In October, it is Ukraine's turn, with ~500,000 bbls heading to the port of Kerch.

(Click to enlarge)

5) Although oil and gas infrastructure was able to avoid the impact of Hurricane Matthew, power outages were widespread. At its peak, roughly 2.5 million residential, commercial, and industrial electricity customers were without power across five states.

Florida, who received the brunt of Matthew's force, saw the largest outages, with nearly one million customers (10 percent of all customers in the state) without service. As for South Carolina, its outages peaked at 800,000 customers, one third of the state’s total customers.

(Click to enlarge)

By Matt Smith

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  • JHM on October 18 2016 said:
    You might not want to count on much oil demand from India in 2040. They want to go 100% EV by 2030.

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