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By Rakesh Sharma
Oil demand growth in the key Asian market of India is set to slow next year as the spurt in consumption that followed the pandemic fades, echoing a slowdown in China and presenting a fresh headwind for prices.
Consumption will expand 150,000 barrels a day in 2024, down from about 290,000 barrels a day seen from 2021 to 2023, according to Rystad Energy Head of Oil Trading Mukesh Sahdev. The drop will return growth near the pace seen from 2011 to 2019, he said. The International Energy Agency, meanwhile, sees growth halving to 100,000 barrels a day, according to its November report.
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Oil prices have tumbled this quarter on persistent concerns that global supplies are outpacing demand. The drop comes despite plans for deeper output cuts by the Organization of Petroleum Exporting Countries and its allies, with production expanding elsewhere, including in the US. At the same time, crude demand growth is expected to slow next year, casting a pall over the outlook.
India is the third-biggest crude consumer, and a vital market for producers from the Middle East as well as from Russia, with Moscow boosting flows after the 2022 invasion of Ukraine. India’s economy has been expanding at a rapid clip — the economy grew 7.6 per cent in the third quarter — lifting demand for gasoline, diesel and other products. While overall oil consumption is at record, the rate of expansion will ease as the one-off lift following the pandemic passes.
It is a similar picture in China, the world’s biggest crude importer. In 2024, the country will consume an additional 500,000 barrels a day, according to the median of estimates from 12 industry consultants and analysts surveyed by Bloomberg this month. That’s less than a third of the increase in 2023.
The more challenging outlook — coupled with skepticism about the ability of OPEC+ to deliver on planned cuts — has weighed on Brent crude, the global benchmark. After nearing $98 a barrel in late September, prices are now on course for a third consecutive monthly drop. Futures were last near $75.
Consultancy FGE is also among those forecasting a slower pace of Indian demand growth in the new year. Dylan Sim, a senior analyst, sees consumption expanding by 20,000 barrels a day less than in 2023.
