September 11, 2019
India's oil demand, the third largest globally, is projected to rise 3.2 per cent to 4.88 mb/d in 2019
India to outpace the world's second-biggest oil consumer, China, in oil demand growth in 2019 and 2020
India holds 28 trillion tonnes approx. of oil and gas reserves, 60 per cent of which is yet to be harnessed
OPEC prioritises structural reforms in labour laws, taxation and legal system to ease path for Indian businesses
India is set to experience the fastest rising oil demand globally in 2019 and 2020, according to a recent report from OPEC. The oil producing cartel attributed this rise in demand to a slowing down in the country’s economic expansion over the same time period.
In the report, OPEC stated that India’s oil demand is projected to rise by 3.2 per cent to 4.88 million barrels per day (mb/d) in 2019 from 4.73 mb/d in the previous year, according to an article in the Times of India. This trend is set to continue into 2020, as demand will rise further by 3.36 per cent to 5.05 mb/d, showcasing India’s potential to outpace the oil demand growth of China, the world’s second biggest consumer of oil behind USA, in the next two years.
India holds oil and gas reserves of around 28 trillion tonnes, 60 per cent of which is yet to be harnessed. In 2018, the Union Cabinet, chaired by Prime Minister Narendra Modi, approved a policy to promote and incentivise more efficient methods to improve domestic production of oil and gas, in line with Central Government’s aim to make the nation independent on energy consumption.
OPEC, which considers India to be amongst its largest consumers, observed lower-than-expected growth rates for first half of 2019 but attributes this to downward shifts in global consumption trends. Although India’s economy grew at a slower than expected 5 per cent in April-June of 2019, the report projects improved numbers moving into the second half of the year.
“Fixing India’s weak growth has become the highest priority,” states OPEC, explaining how India’s economic slowdown could result in structural reforms – covering labour laws, taxation and the legal system – which will ease the path for India’s businesses. It added that stimulus from both the RBI and the government is set to provide some economic relief in the second half of 2019.