Commodities News

India oil demand to rise 4.2% on year in 2024: OPEC

Rising diesel consumption key driver

India’s oil demand in the year 2024 is expected to see a growth of 220,000 barrels per day to reach 5.57 million barrels per day, up 4.19% from 2023, as per an estimate by OPEC.

In its latest oil market report, the grouping attributed the forecast to improved investment environment and economic activity, and highlighted that the growing demand will be supported by increased consumption of diesel and other petroleum products.

The demand will further be supported by the annual traditional festivities which are expected to support transportation activity and boost gasoline demand, while the ongoing air travel recovery is expected to bolster jet or kerosene demand.

“Diesel is expected to be the driver of oil demand growth, supported mostly by agriculture, construction and manufacturing activities,” OPEC said. “Overall, India is expected to see healthy oil demand growth of 220,000 barrels per day on-year in 2024.”

Moreover, the country’s oil demand in January surged by 386,000 barrels a day on year, up from 133,000 barrels per day witnessed in the previous month, according to data from OPEC. The increase in demand is attributable to the rising consumption of the petroleum products including bitumen which is used for road construction.

India’s requirement for gasoline increased by 75,000 barrels per day on year due to heightened mobility levels. “Continued strong vehicle sales, which increased by 15%, on-year, in January, also contributed to rising gasoline demand.” LPG consumption, too, rose by 72,000 barrels per day from last year.

The country is expected to witness the current positive momentum of economic activity in the near term. “This will be largely driven by robust investment and services amid an expected surge in the manufacturing and construction sectors brought on by government spending and an improved investment environment, which are expected to support India’s oil demand in the first half of 2024,” the report said.

In 2025, OPEC expects India’s oil demand to rise by an average of 228,000 barrels per day on the back of healthy economic growth amid steady manufacturing and business activities. “Demand for transportation fuels and petrochemical feedstock is expected to remain healthy and support oil demand over the year.”

Furthermore, the organisation has kept the world oil demand growth forecast unchanged at 2.2 million barrels per day from last year taking the global oil demand at 104.5 million barrels per day in 2024.

“In 2025, global oil demand is expected to see robust growth of 1.8 million barrels a day, year-on-year. The OECD is expected to grow by 0.1 million barrels a day, on-year, while demand in the non-OECD is forecast to increase by 1.7 million barrels a day.”

Oil production in one of the world’s largest oil suppliers, Russia, is projected to see the largest decline in 2024 by 180,000 barrels a day followed by Mexico with a 50,000 barrels a day reduction in output. The key drivers of non-OPEC supply growth are forecast to be the US, Canada, Brazil and Norway. The estimated reduction in oil supply from Russia may hurt India’s imports of crude oil as Russia has emerged as the top supplier of crude to India post the outbreak of Russia-Ukraine conflict.

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