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The coronavirus outbreak has restricted travel and slowed down industrial activity in India to the point of reducing overall fuel demand in the country by 10-11 percent in the first two weeks of March, Indian Oil Corp, the biggest domestic refiner and fuel retailer, says.
“The petroleum industry is witnessing the impact of Covid-19 on sales of all petroleum products,” state-held Indian Oil Corp told local outlet Economic Times in an emailed reply to questions.
Total demand for all kinds of liquid fuels in India - one of the key growth drivers of global oil demand alongside China - was down by 10 to 11 percent for the first fourteen days of March, the company told Economic Times.
Stopped flights, travel restrictions, and travel advisories have led to a double-digit drop in demand for gasoline, diesel, shipping fuel, and jet fuel, according to the largest Indian oil refiner.
Before the coronavirus outbreak, India and China were the countries expected to contribute the most to oil demand growth this year. Now analysts expect global oil demand to actually drop in 2020 compared to 2019 as a growing number of major economies are going into lockdown and are heavily restricting inbound air traffic and domestic travels.
Oil prices were plunging on Wednesday as the pandemic and the coming extra oil supply from Saudi Arabia are set to result in the largest ever crude glut on the oil market in the first half of 2020, as per IHS Markit estimates.
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While low oil prices may be a boon to India’s refiners who rely on imports for more than 80 percent of oil demand, the coronavirus outbreak is curbing global oil demand and is threatening to tip the global economy into recession.
As of Wednesday, India had 155 cases of coronavirus infections, including 25 foreign nationals and three fatalities. India has banned entry for passengers from several Southeast Asian countries including the Philippines and Malaysia, as well as for passengers from the European Union (EU) and United Kingdom.
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.