India’s fuel demand to reach 400-450 million tonnes by 2040 from the present 250 million tonnes: IOC

India’s crude oil demand has been on the mend since mid-summer. It is likely to continue along this same vein for quite a while, with at least one refiner planning to boost refining capacity considerably.

“Forecasts by various agencies see Indian fuel demand climbing to 400-450 million tonne by 2040 from the present 250 million tonne. This offers enough legroom for all forms of energy to co-exist,” IOC’s chairman, Shrikant Madhav Vaidya, told Indian media in late August. Demand is already back to pre-pandemic levels, the executive noted.

This fast rebound in oil demand after India became the epicenter of one of the worst infection waves since the start of the coronavirus pandemic suggests it might gain even more importance as a key export market for big oil producers. The suggestion is supported by Saudi Arabia’s recent price cut for Asian clients.

India, the world’s third-largest oil importer, has become a key factor for oil prices because of its overwhelming dependence on imported crude. During the latest wave of Covid-19 infections in the country, oil demand suffered an expected slump. But now things are looking up.

Indian refiners increased run rates to the highest in three months in response to strong fuel demand that followed the relaxation of movement restrictions after the worst of the wave.

Sales of passenger vehicles in India soared by as much as 45 per cent on the year in July, according to a Reuters report from earlier this month. The report attributed the boom to pent-up demand. Still, it must have also had something to do with the shift to personal transportation at the expense of public transportation. Gasoline demand is booming, and refiners are planning capacity increases for the coming years. Indian Oil Corporation is planning to boost its refining capacity by 25 per cent, or 350,000 bpd, over the next four years.

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