India's Oil Demand Growth Rate to Again Eclipse China
The dramatic rise in India’s oil demand shows no signs of faltering, leading analysts to say that the country will remain a driver of Asian growth in 2017.
Consumption is expected to rise 7-8% this year, outpacing China’s demand growth for the third consecutive year, Platts reported.
The cash crunch following New Delhi’s move in early November to demonetize more than 80% of its currency is expected to temporarily dampen the country’s appetite for oil products in the first quarter, or maybe a little longer.
But gains in oil demand that the country is set to achieve from the “Make in India” initiative — which aims to raise the share of manufacturing in GDP over the next few years — will more than offset the negative effects of demonetization, analysts said.
The government’s clean fuel drive, sharp anticipated growth in transport demand and air travel, and the country’s insatiable growth for petrochemicals will act as a boon for gasoline, jet fuel, LPG and naphtha, helping oil products to post close to double-digit growth in 2017 — similar to that seen last year — if not higher.
“For the third year in a row, India’s oil demand growth will outpace China’s demand growth,” Platts Analytics said in a note, adding that it was expected to grow at about 7% to 4.13 million barrels per day in 2017, compared with 3% in Chinese oil demand to 11.5 million bpd.
India’s demand for oil products in November rose 12% year on year to 16.6 million tons, or 4.35 million bpd, data showed. Over January-November, oil products demand rose around 9% year on year to 176.36 million tons, or 4.1 million bpd.
While growth fundamentals for oil in India remain high, slower growth in the initial months of 2017 because of demonetization might pull down the overall oil demand growth in 2017 to a shade below 2016 levels, according to analysts.