India’s oil demand recovery poised to weather Covid return

Indian oil refiner Hindustan Petroleum Corp. is cautiously optimistic that the country’s post-pandemic recovery will remain largely intact, despite a recent spike in coronavirus cases.

Infections have risen and fewer vehicles are crossing the streets of India’s capital, but authorities have so far refrained from instituting a nationwide lockdown, opting for targeted restrictions such as closing bars. While people are avoiding unnecessary travel, there has been no substantial impact on demand, according to Hindustan Petroleum Chairman Mukesh Kumar Surana.

“There is no doubt that January will be subdued compared to December,” Surana said, predicting the current spike in Covid-19 infections should flatten out this month. “I don’t see a long trend in this wave.”

India was hit hard by a devastating delta variant outbreak early last year that overwhelmed the healthcare system, although the nation was spared a similar 2020 oil demand slump after avoided a nationwide lockdown. The economy recovered in the second half of 2021 as vaccination rates rose, with diesel consumption hitting a two-year high in December and gasoline consumption the highest since 1998.

In the first 10 days of 2022, gasoline and diesel sales – which together account for more than half of India’s total oil consumption – fell 2% to 3% year on year. previous year, according to preliminary estimates by refinery officials with direct contacts. knowledge of the subject. Pedestrian traffic at the country’s airports has also decreased, according to data from the Ministry of Civil Aviation.

The global outlook still remains optimistic. India’s total oil demand is expected to rise 4-5% in the 12 months to March 31 from a year earlier, according to Prashant Vasisht, vice chairman of ICRA Ltd., the unit local Moody’s Investors Service. The current virus wave will not have a lasting impact on demand, Vasisht said, predicting 3-5% growth next year.

Indian refiners are also maintaining strength in their crude purchases. Bharat Petroleum Corp. is seeking additional volumes from Saudi Arabia for delivery in February, while major processor Indian Oil Corp. recently launched a tender to buy West African crude from the Americas for February and March loadings.

“From February it will be normal again,” said Surana of Hindustan Petroleum.

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Felix J. Dixon