India’s oil demand growth slowing down – Reuters

A slowdown in India's oil demand growth could undermine the market’s ability to absorb surplus oil as production in non-OPEC countries continues to grow.

PHOTO: Oil barrels with Indian flag. Getty Images

India, world's third-largest oil consumer, has noted a slowdown in oil demand growth at a time when oil consumption in China, the US, and Europe is relatively tepid, Reuters analyst John Kemp said.

India’s oil consumption grew by around 255,000 b/d in the first seven months of 2023. However, this growth is substantially slower than 415,000 b/d in 2021-22, when the economy recovered from the Coronavirus pandemic and lockdowns, Kemp explained.

“India’s petroleum consumption increased to a record high in the first seven months of 2023 but growth has slowed markedly as the rebound from the coronavirus pandemic and lockdowns is completed,” Reuters reported.

Meanwhile, China’s oil imports slipped by around 18% in July. As production in non-OPEC countries continues to grow, this slowdown in demand may impede the market's ability to absorb surplus oil, which in turn could weigh on the Brent price, Kemp added.

However, the International Energy Agency (IEA) has provided a silver lining for the Brent price. In its latest oil market report, the IEA has forecast the world oil demand to reach a record level in August and global oil consumption to increase by 2.2 million b/d, to an average of 102.2 million b/d this year.

According to the IEA, China would lead the demand growth in 2023, but the OECD nations would also play a key role.

By Konica Bhatt

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