India’s oil demand expected to jump 8% in 2022
India’s oil demand is expected to jump 8.2% to 5.15 million barrels per day in 2022 as the economy continues to rebound from the ravages of the pandemic.
The Organization of the Petroleum Exporting Countries (OPEC) in its latest monthly oil market report forecast that the world’s third largest energy consumer will add 0.39 million barrels per day (bpd) of crude oil demand in 2022.
India’s oil demand increased from 4.51 million barrels per day in 2020 to 4.76 million bpd in 2021, registering a growth of 5.61%.
But, that was below pre-pandemic levels. Oil demand in 2018 was 4.98 million bpd, which rose to 4.99 million bpd the following year before the pandemic hit.
“With strong economic growth expected of 7.2% in 2022 and rapid containment expected from Omicron in the near future, oil demand is expected to recover,” the OPEC report said.
Mobility continued to improve, as the average driving activity in India increased. Oil demand this year has increased as states ease COVID-19 restrictions in line with falling new infections.
“Petrol (petrol) and diesel are likely to be particularly favored by the expected rise in GDP and mobility already recovering and therefore motor activity,” he said.
Similarly, in line with forecasts of a robust economy in 2022, the industrial sector will provide support for diesel, LPG and naphtha needs.
Improvement in jet kerosene demand is expected to be slower in 2022 due to travel challenges, especially business-related, he said. “Nevertheless, India is expected to grow by 0.4 million bpd year-over-year in 2022.” OPEC’s projection is in line with government estimates of fuel demand growth. According to the Petroleum Ministry’s Petroleum Planning and Analysis Unit (PPAC), India’s fuel demand is expected to increase by 5.5% in the fiscal year beginning April 1.
Fuel consumption in 2022-23 is expected to increase to 214.5 million tonnes (4.3 million bpd), compared to forecast sales of 203.2 million tonnes in the current fiscal year ending March 2022.
While the OPEC projections are for crude oil demand, the CMYP forecasts are for fuel. Crude oil is converted into fuel such as gasoline and diesel at refineries and not all petroleum products produced are consumed in the country. A significant amount of petroleum products is also exported, resulting in a discrepancy between crude oil and fuel demand estimates.
“India’s crude imports averaged 4.5 million bpd in January, down about 3% from the high level seen the previous month. February data is expected to show higher crude imports as the economy gains momentum, demand picks up and refiners ramp up cycles,” the OPEC report said.
Imports represent 85% of India’s oil needs.
“In terms of crude imports by source, the latest data from December shows that Iraq continues to hold the top spot, with a 27% share.
“Saudi Arabia was second with around 17%, followed by the United Arab Emirates with around 13%, the latter seeing an increase in volumes. The United States also saw a strong increase, rising to fourth place, with 9% “, he added.
According to the PPAC, India’s fuel demand will exceed pre-pandemic sales levels in the current fiscal year. In 2019-20, India consumed 214.1 million tons of petroleum products such as gasoline, diesel and LPG.
Demand for petroleum products increased by 4.2% in the first 10 months of the current fiscal year which started in April 2021. Fuel consumption was 165.7 million tons from April 2021 to January 2022 .
India consumed 194.3m tonnes of oil produced in 2020-21, the year that saw a pandemic-related lockdown cripple the economy and mobility, and 214.1m tonnes in 2019-20 .