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Crude oil demand growth in India is projected to slow down next year as the post-pandemic rebound begins to lose momentum both in China and India.
This is according to Rystad Energy, whose head of oil trading Mukesh Sahdev predicts India’s oil demand growth will fall to 150,000 bpd in 2024 from 290,000 bpd this year. This would bring the rate of demand growth closer to the rate observed in the period between 2011 and 2019, Bloomberg noted in a report.
India is the world’s third-largest oil consumer and a growing one, along with China. Its economy is growing faster than the global average and so is its energy demand. Since last year, India has become a top buyer of sanctioned Russian oil, a lot of which, in the form of fuels, it has been exporting to Europe, which leveled the sanctions on Russian crude.
India’s oil consumption is currently running at a record high but further growth will be slower as the economy returns to business as usual, according to analysts. This will add pressure to prices that are already pressured by perceptions of a supply glut combined with weaker demand, per projections.
Despite these predictions of slower demand growth, India is boosting its refining capacity. The country should add 1.12 million bpd to its current total each year until 2028, a junior oil minister told India’s parliament earlier this month.
Total Indian refining capacity is expected to increase by 22% in five years from the current 254 million metric tons per year, which are equal to around 5.8 million bpd, Rameswar Teli said. The government expects the boost to refining capacity to be “adequate” to meet the country’s fuel demand in the long term.
The subcontinent is expected to replace China as the world’s top oil demand driver in the near future.
