India’s oil demand growth will slow down in 2024 following record-breaking years

14 Dec 2023 , 02:04 PM

The surge in consumption that followed the pandemic is expected to taper off in India, the major Asian market, next year, mirroring a slowdown in China and adding to the pressure on oil prices.

According to Mukesh Sahdev, Head of Oil Trading at Rystad Energy, who talked to Bloomberg, consumption will increase to 150,000 barrels per day in 2024, from about 290,000 barrels per day observed during 2021 to 2023. He claimed that the decline will bring growth back to a level similar to that of 2011 to 2019. In contrast, the International Energy Agency reports from November that growth has halved to 100,000 barrels per day.

This quarter, oil prices have fallen due to ongoing worries that supply is surpassing demand worldwide. The decrease occurs in spite of the Organisation of Petroleum Exporting Countries and its partners’ intentions to further reduce output, even as production rises elsewhere, especially in the US. A gloomy picture is created by the expectation that the growth in petroleum demand will slow down in the upcoming year.

India is the third-largest consumer of crude oil and a crucial market for Middle Eastern and Russian suppliers, with Moscow expected to increase supply following the invasion of Ukraine in 2022. India’s economy has been growing quickly; in the third quarter, it grew by 7.6%, which increased demand for goods like petrol and diesel. Despite record-high global oil usage, the rate of expansion is expected to slow down.

China, the largest importer of crude oil worldwide, has a similar situation. The nation will use an extra 500,000 barrels per day in 2024, based on the median estimate from 12 industry consultants and analysts that Bloomberg polled this month. That is less than one-third of the 2023 increase.

The more difficult outlook and doubts about OPEC+’s capacity to carry out the agreed-upon cutbacks have put pressure on Brent crude, the world benchmark. The price of a barrel is currently headed towards a third consecutive monthly decline, having approached $98 in late September. Futures last traded at $75.

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