India’s crude oil demand is expected to rise to 500 million tons annually, or around 10 million bpd, by 2040, from around 4.7 million bpd in 2017, Partha Ghosh, executive director for optimization at the biggest refiner Indian Oil Corporation, said on Tuesday.
Total global oil demand is forecast to rise by another 15.8 million bpd by 2040, Reuters quoted the manager as saying on the sidelines of the Asia Pacific Petroleum Conference (APPEC) in Singapore.
Of this expected global demand growth, India’s demand growth would be around 24 percent, Ghosh said.
India’s economic growth is driving energy demand growth, but the rate of that growth is expected to slow by 2024-2025.
The single biggest hindrance for India’s oil demand growth will not be alternative energy or energy efficiency, it will be higher oil prices, Ghosh told Reuters, noting that India’s economy is highly sensitive to oil prices. Estimates have it that a $10 a barrel rise in oil prices reduces India’s gross domestic product (GDP) by 0.2-0.3 percent, the manager said.
India—which imports around 80 percent of the oil it consumes—will see its energy consumption growing at the fastest rate among all major economies by 2040, according to the BP Energy Outlook 2018. Oil imports will rise by 175 percent and account for 65 percent of the increase in energy imports, BP says, estimating India’s oil consumption at 10 million bpd in 2040.
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According to OPEC’s just released 2018 World Oil Outlook, India is projected to be the country with the largest additional oil demand and the fastest growth in the period to 2040. India will see the largest additional demand of 5.8 million bpd, likely passing the 10-million-bpd mark sometime towards the end of the forecast period, OPEC said.
While India is expected to continue to be a key driver of global oil demand growth, its vulnerability to oil prices could act as a demand destroyer in periods of higher oil prices.
Over the past few months, rising oil prices and the weakening Indian currency, the rupee, have already created a perfect storm for India, and refiners and the government are said to be considering various measures to reduce their spending on oil imports, including hedging or using stockpiles.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.