A shift in oil demand is imminent, with India overtaking China as the most important driver of global growth — and potentially the ultimate, as the world transition to a greener future.
A growing population, which has likely overtaken China, will help underpin that growth along with consumer trends. India’s transition from traditional petrol and diesel fueled vehicles is expected to be slower than in other regions, while China’s use of electric vehicles is skyrocketing.
While India is unlikely to replicate the enormous scale of China’s expanding oil network – the country’s daily crude consumption is three times higher than that of its neighbour – traders and Exporters looking to tap into dwindling global demand growth will bet against the South Asian nation over the next decade .
Parsley Ong, Asia head of energy and chemicals research at JPMorgan Chase & Co, said: “India has consistently surpassed China in the short term to become the engine of global demand growth, mainly for due to demographic factors such as population growth”. . in Hong Kong.
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China’s economic awakening at the turn of the century turned the country into a powerhouse consuming commodities ranging from crude oil to metals and grains, giving impetus to resource-rich nations around the world. gender. For oil, the boom is coming to an end, with top refiner China National Petroleum Corporation recently forecasting China’s oil consumption to peak around 2030.
The change of demand growth leader is even closer.
Image files are used for representation purposes only. (HT_PRINT)
China’s ‘Ultimate Happiness’
Ed Morse, industry veteran and head of commodities research at Citigroup Inc., said China’s recovery from years of restrictions due to Covid-19 will likely be the “final push”. needs of this country. Viktor Katona, lead crude oil analyst at data intelligence firm Kpler, thinks India’s growth will surpass China’s from 2026. He also predicts India’s oil demand will peak at the end of the year. 2036.
Emma Richards, senior analyst at Fitch Solutions Ltd. in London, said: “China’s role as a driver of global oil demand growth is rapidly fading. Over the next decade, China’s share of total emerging-market oil demand growth will drop to 15%. from nearly 50%, while India’s market share will double to 24%, she said.
India played a more prominent role in the oil market after its invasion of Ukraine over a year ago. The South Asian country has become a major consumer of Russian crude, turning the OPEC+ producer’s oil into a fuel that is often shipped to other regions such as Europe and the US.
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This is not the first time that India has been mentioned as a new oil demand growth hub, with similar predictions made in the middle of the last decade. If it comes to fruition at this point, the transition to the top will likely not be smooth and bogged down by bureaucracy.
State refiners have been slow to modernize their operations and still follow the old and cumbersome process of issuing tenders to buy spot oil, rather than adopting a more agile and flexible approach than negotiation. Negotiate and sign agreements directly with counterparties.
India’s fast-rising crude oil demand will make the South Asian nation an attractive opportunity for foreign traders and producers in the long term, said Vandana Hari, founder of Vanda Insights in Singapore.
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Explosion EV
India has lofty ambitions in transforming its industries, including transportation, into greener energy options, but the country is lagging behind other major nations, which means India’s dependence on fossil fuels is likely to last much longer.
By contrast, electric vehicle adoption in China is accelerating, an ominous sign for long-term gasoline demand in the world’s largest car market. Electric vehicle sales in China nearly double to 6.1 million units by 2022, compared with 48,000 vehicles in India, according to BloombergNEF. BNEF says electric vehicles have replaced more than 1.4 million barrels of oil a day globally.
First published date: March 24, 2023, 16:45 pm IST
