India, one of the drivers of oil demand growth in Asia and the world, has just seen its oil imports drop to three-year lows and fuel processing rates plunge to a 15-year low, as slowing economic growth is taking its toll on demand.
According to India's government data compiled by Bloomberg, refinery runs in September were at their lowest in 15 years, amid waning demand for fuels.
India's diesel exports increased last month, due to slowing domestic demand. Diesel is the most consumed fuel in India and is used as a gauge for economic activity.
Crude oil processing in India dropped by 6.9 percent on the year in September, which was the largest annual decline since June this year, according to provisional government data cited by Reuters. Some refineries were shut for maintenance and others for fuel upgrades because India is getting ready to migrate in April next year to less polluting fuels in order to cut emissions.
India's state-held refiners-which hold more than half of the country's refining capacity of 5 million bpd-saw their crude oil processing volumes drop by 12.67 percent in September from the same month last year.
India's total crude oil imports also dropped in September, to a more than three-year low of 3.82 million barrels per day (bpd), according to industry and shipping sources cited by Reuters. Imports last month were down by 18.7 percent from August and fell by 8.4 percent from September 2018.
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"Due to weakening fuel demand there was an inventory build-up of refined products so we had to cut crude processing and restrict imports," an official at an Indian refiner told Reuters.
Industrial demand in the world's third-largest oil importer has been weakening and reduced fuel demand to the lowest in more than two years in September.
India's economic growth is set to slow down in the near future, international organizations say, and this could further impact India's fuel demand. The International Monetary Fund (IMF) cut its forecast for India's economic growth to 6.1 percent for the 2019-2020 fiscal year, down from a previous forecast of 7 percent growth. Fitch Ratings also revised down its forecast to the slowest growth in six years, 5.5 percent for 2019-2020.
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. More