Demand for oil is moving up globally and is expected to move the same way in India.
The demand supply parameters of the Indian oil sector have assumed greater significance with the US-led troops occupying Iraq and global supply of oil still unstable owing to disruption of supply from Iraq and continued disturbances there holding up restoration of normal oil supply.
However, production from India is expected to gradually decline, increasing the Indian dependence on imports.
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According to analyst estimates, Indian demand rose only 0.5 per cent during 2001 and increased by just 2 per cent in 2002. Indian demand grew close to 5 per cent annually during the four years through 2000.
However, analysts are yet unclear whether this growth slowdown was structural and caused by efficiency gains in transportation and replacement of oil by gas in power generation, or extraordinary one-off events. Indications are that the fall-off in demand growth were only partially structural.
However, going forward, oil demand in India is expected to grow nearly 4 per cent annually over the 2003-08 period.
The high sales of vehicles and diesel engines for mini generator and pumpset applications should ensure that.
Oil demand from China has remained substantially immune to the global slowdown in 2001-2002. Elsewhere in Asia, oil demand showed clear signs of being affected by high oil prices and lower GDP growth.
India ranks fourteenth in terms of oil use in current 2003 financial year among non-OPEC producers. The consumption leaders of course were US, Russia, Mexico and China.
Analyts expect that a significant amount of imports from OPEC countries would continue to flow into major consuming countries like the US, Europe, Japan, Korea, India and China.
With Korea