India, the third-largest oil consumer and importer, has been seen as a key source of global oil demand growth, especially given the Chinese economic struggle. India accounts for about 5% of the global demand, compared to China’s 15%.
If India’s oil demand growth also falters after China, it would further pressure oil prices, said an industry executive.
Lower crude prices would bring down import bills and boost refiners’ margins.
Brent, the global crude benchmark, has risen 10% in a month to about USD 78 per barrel but is still down about 14% from six months ago. This is when OPEC+, a group of about two dozen oil-producing countries led by Saudi Arabia and Russia, has kept about 5% of the global supplies off the market. The cartel’s plan to gradually return the restricted supplies to the market may further pressure prices.
India’s consumption of refined petroleum products fell 1.6% year-on-year in September, driven by a surprise 1.8% contraction in diesel demand ahead of the festive season, according to the oil ministry data. In August, total refined products consumption fell 2.6% and diesel declined 2.5% year-on-year. Diesel sales have grown 1.7% annually in the past five years.
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