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India reached a 14-year low in fuel demand as the effects of a massive flooding event that unfolded over the past few weeks become clearer.
National oil demand fell by 6.1 percent as Indians in select areas tend to their homes to measure the water damage from stronger than usual monsoon rains.
India is the world’s fastest growing oil consumer. The Asian country used 15.75 million tons of fuels last month, about 1 million tons lower than figures from last year from the same month. Demand for diesel – which represents 40 percent of fuel demand for the country - fell 3.7 percent as well.
“Severe flooding in parts of the country may have impeded freight and manufacturing activities causing overall demand to contract,” Nevyn Nah from Energy Aspects said. “Also, demand growth was exceptionally strong in August last year resulting in a high base.” Last August’s figures showed 18 percent growth compared to the previous month.
This most recent hit to oil demand is the second time this year that Indians have reduced their craving for the world’s favorite fossil fuel. After the implementation of Prime Minister Narendra Modi’s demonetization strategy, demand dropped 5.9 percent.
Assam, West Bengal, Bihar, and Gujarat all suffered from severe rain over the past few weeks, causing demand for fuel for cars to drop. Flooded roads tend to lower the thirst for gasoline and transportation related fuels.
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The International Energy Agency sees India as the fastest developing oil consumer through the year 2040. Still, in four of the eight complete months this year, demand has continuously fallen. Still India remains dependent on oil imports as 80 percent of national fuel demand is met via imports.
India is ready to buy oil from Russia, the United States, and any other trustable producer as the country’s middle class grows quickly and voraciously.
By Zainab Calcuttawala for Oilprice.com
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Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…