India’s 2022 oil demand to exceed pre-pandemic levels, but uncertainty remains: OPEC

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Biznextindia : The Organization of Petroleum Exporting Countries (OPEC) has estimated that, in 2022 India’s oil demand to increase by 0.3 mb/d to 5.24 mb/d, to exceed pre-pandemic levels . However, uncertainty remains high due to pandemic and high oil prices.

“In 2022, similar to last month’s expectations, oil demand is anticipated to increase by around 0.3 mb/d with total volumes expected to exceed pre-pandemic levels on an annualized basis. COVID-19 containment measures are projected be aided by the acceleration in vaccination efforts, natural immunity and better treatments for COVID-19. The economic outlook remains as highlighted last month, showing an increase in GDP of around 6.8%. From the products side, gasoline is projected to lead oil demand growth in 2022, supported by increasing mobility, a pickup in two-wheeler sales compared to the current year, and overall economic developments. Diesel is assumed to be supported by healthy industrial, construction and agricultural activities in 2022” the OPEC said in its August oil market report.

The organization has said that India’s Petroleum demand will continue to improve with continuous recovery in economic activity in the second half of 2021. However, uncertainty remains high due to the pandemic and high oil prices.

“Economic activity is projected to continue to recover in 2H21 and as such demand for petroleum products is expected to improve. However, uncertainty remains high mainly due to the COVID-19 pandemic and the pace of vaccination efforts across the country. Additionally, high retail prices add to the uncertainties going forward. Oil consumption is projected to pick up pace over the short term, supported by the low baseline and uptick in diesel demand in a number of sectors, including construction and agriculture. The recovery in transportation fuels is anticipated to depend on pandemic developments and the government’s countermeasures. Together with the 2020 baseline decline, oil demand is projected to show healthy growth in 2021. Demand for transportation fuel will lead product demand, followed by middle distillates with most of the gains appearing in 2H21” the report added.

India’s oil demand increased marginally in June, with data showing a rise of around 0.1 mb/d y-o-y after marginally dropping in May due to the prevalence of the COVID-19 Delta variant. Oil demand declined by 0.2 mb/d when compared to June 2019, largely resulting from weaknesses in diesel and transportation fuels.

OPEC has estimated that in 2021, total global oil demand is estimated to increase by around 6.0 mb/d to 96.6 mb/d. In 2022, world oil demand is projected to increase by 3.3 mb/d y-o-y to reach 99.9 mb/d.  Total world oil demand is projected to surpass 100 mb/d in 2H22.

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