In its latest revision, S&P Global Platts has cut India’s 2021 demand forecast for oil products by 9 per cent to 400,000 barrels per day (b/d) now, as compared to 440,000 b/d estimated last month. The surging Covid cases across the country that have triggered lockdowns and mobility curbs across key economic hubs in India is the primary treason for the cut in demand forecast.
“Lockdowns have been imposed in some pockets and provinces. Therefore, we have adjusted India’s total oil product demand growth for 2021 down to 400,000 b/d for the latest update, as against 440,000 b/d last month, pending further adjustment in the future depending on the COVID-19 situation,” said Platts Analytics in a note.
With several states under lockdown, Platts believes India’s gasoline consumption is expected to drop in the near-term to around 700,000 barrels per day in April. “That’s down about 11 per cent from March. Hopes of recovery gaining traction are picked from June onwards,” Platts said.
The total oil demand in India, according to S&P Platts’ estimate, had declined to 470,000 b/d in 2020 when the first wave of the pandemic pulled down the country’s oil products consumption to the lowest level in nearly two decades.
“Indian refiners have so far stayed away from slashing crude run rates sharply despite the surge in COVID-19 cases to record highs, but with a rise in regional lockdowns and its subsequent impact on mobility and industrial activity, analysts said they will be forced to scale back crude runs in anticipation of a slowdown in oil demand,” Platts said.
A silver lining, however, could be railways that still chugs along – transporting key essentials across the country. A CRISIL report has said that the impact of the second Covid-19 wave on industrial activities thus far remains small, aided by movement of goods across the rail network.