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Fuel demand in India reached the highest level in seven months in December 2023, topping 20 million tons in total, oil ministry data cited by Reuters shows.
On a monthly basis, demand was up by 6.2%, while on an annual basis, the increase stood at 2.6%. Among fuels, all but gasoline booked increases in demand.
India is widely seen as one of the two biggest drivers of global oil demand, alongside China. The subcontinent is the third-largest oil consumer globally.
Its economy is growing faster than the global average and so is its energy demand. Since last year, India has become a top buyer of sanctioned Russian oil, a lot of which, in the form of fuels, it has been exporting to Europe, which leveled the sanctions on Russian crude.
This soaring demand, however, is seen slowing down this year, shrinking to 150,000 bpd from 290,000 bpd in 2023, according to Rystad Energy. Even so, India is working to secure its long-term supply of hydrocarbons.
Late last year, New Delhi sealed a preliminary oil and gas deal with the Guyanese government, covering everything from offshore exploration to oil and gas supply.
The deal with Guyana should help India diversify its sources of crude oil, boosting its energy and supply security, the Indian government said.
The country imports around 85% of all the crude oil it consumes and has been seeking to diversify supply and procure crude at the cheapest possible price. This made it a top buyer of Russian discount oil last year, with Russia turning into the biggest supplier of crude to India.
As demand for oil grows, India is boosting its refining capacity, which this year is expected to add 1.12 million bpd and keep expanding at this rate until 2028. The total capacity expansion over the period would amount to 22%.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com