A report from Wood Mackenzie…
Sentiment in oil markets remain…
India’s crude oil imports last month totaled 4.2 million tons daily, or 17 million tons for the whole period, which was 11.4 percent lower than the foreign oil intake for the same month last year, S&P Global Platts reported, citing data from New Delhi’s Petroleum Planning and Analysis Cell. On a sequential basis, crude oil imports were down by 19.4 percent, the data also showed.
While part of the reason for the decline—to a four-year low—was a seasonal one, with many Indian refineries shutting down for regular maintenance, the Iran sanctions also had a part to play in discouraging refiners to keep up their usual intake of foreign crude.
However, for the first 11 months of the year, Indian crude oil imports jumped by 5.4 percent on the year to 207.8 million tons, or about 4.56 million barrels daily.
Earlier this year, Wood Mackenzie forecast that India will overtake China as the biggest driver of crude oil demand growth by 2024. In the longer term, between 2017 and 203, India’s oil demand would surge by a total 3.5 billion barrels daily, the firm’s analysts projected. The factors determining this projection are led by a growing middle class alongside greater mobility among the population.
This demand growth will account for as much as a third of the global total, Wood Mac said, noting that this trend will be accompanied by a possible decline in Chinese oil demand over the period. China has bet big on renewable energy for electricity and on electricity for transportation, which is bound to affect its oil demand sooner rather than later.
India, on the other hand, will need more oil refining capacity in order to be able to satisfy this growing demand for fuels with local products. However, for now signs point to a shortage: until 2023, India only plans to add 400,000 bpd in new refining capacity. But in the longer term, to 2035, it would need a total 3.2-47 million bpd in new capacity, Wood Mac’s analysts also said. This likely means more refined imports in the future until the capacity shortage problem gets a solution.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.
India’s crude oil imports have risen from an average of 4.34 million barrels a day (mbd) in 2017 according to the 2018 OPEC Annual Statistical Bulletin to 4.56 mbd this year, a rise of just over 5%.
The forecast by Wood Mackenzie that India will overtake China as the biggest driver of crude oil demand growth by 2024 is totally wrong. India’s oil imports are projected to rise to 6.77 mbd by 2024 accounting for 91% of its needs compared with 16.28 mbd for China accounting for 80% of its needs according to my research. While both countries have a growing middle class and increasing population mobility, China’s GDP in 2018 at $25.31 trillion based on purchasing power parity (PPP) is almost 2.5 times India’s GDP at $10.38 trillion also based on PPP. The difference in size between the GDP of both countries is projected to be maintained well into the future.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London