OPEC cuts India’s Oil Demand forecast for 2021 as COVID-19 crisis intensifies

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Biznextindia : The Organisation of Petroleum Exporting Countries (OPEC) has revised India’s 2021 oil demand growth downwards after sharp surge in COVID-19 cases and lockdown restrictions imposed by several provincial governments in the country.

OPEC in its April oil market report has estimated that India’s 2021 oil demand will grow by 13.48 per cent to 4.99 million barrels per day(mb/d). However, it its latest monthly oil market report, OPEC has anticipated that India’s oil demand will grow by 11.1 per cent or 0.49 mb/d to 4.88 mb/d.

“India’s 2Q21 oil demand is projected to be impacted be the recent surge in COVID-19 infection cases. Recent mobility data show weakness in performance towards the end of April and this is anticipated to last well into the month of May and possibly June putting the whole 2Q21 oil demand performance in check. However, some support might emerge from increased usage of private vehicles over public transportation which could cap declines in transportation fuels demand. While 2Q21 product demand has been adjusted lower than previously anticipated, projections will depend on many factors that will affect the magnitude of the impact on the demand. These include government containment measures which are projected to be localised and targeting specific regions, the speed of vaccination rollouts and their positive impact on reducing hospitalization and death rates, and lastly how quickly the population will adapt to COVID-19 measures” read the OPEC monthly report.

“At the same time, anticipated positive developments in the economic outlook, especially in 2H21, and the consequent improvement in several sectors, primarily transportation and industrial sectors, point to solid growth in oil demand in 2021. This forecast is based on the assumption of a positive baseline impact of 2020, stimulus measures taken by the government to encourage private consumption and investment, and a pickup in vaccination rollouts towards the 2H21. However, uncertainties will remain high especially in the 2Q21 due to COVID-19 related developments” it added.

Meanwhile, OPEC has estimated that world oil demand will grow by 6.58 per cent to 96.46 mb/d in 2021 from 90.51mb/d in 2020.

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