India’s demand for petroleum products like petrol and diesel will grow by 7.73% in 2022, the fastest speed in the world, an OPEC report said, India’s demand for oil products is projected to rise from 4.77 million barrels per day (BPD) in 2021 to 5.14 million BPD in 2022, OPEC said in its monthly oil report.
The growth in demand is the fastest in the world ahead of 1.23% in China, 3.39% in the U.S. and 4.62% in Europe. By 2023, the Organisation of Petroleum Exporting Countries (OPEC) projected a growth of 4.67% in India’s demand to 5.38%. This, however, will be lower than the 4.86% growth in China.
India is the world’s third largest oil importing and consuming nation behind the U.S. and China. The demand for petroleum products in India is supported by the healthy economic growth of 7.1%, continuing economic reopening in the middle of ease of COVID restrictions, and loosing of trade-related narrow supporting both mobility and industrial sector activity.
“India’s economy may maintain its upward recovery momentum, but it would be moderate given several risk factors, including high inflation, less accommodative financial conditions, and a discouraging external environment.“Import inflation is expected to continue rising in 2022, leading to a higher trade loss considering that India is a major importer of commodities and slowing global demand would weigh on exports,” OPEC Report said.
Also, the recent increases in interest rates may also weaken the country’s growth prospects since the immediate delay of investment plans in sectors without sufficient capacity utilization. However, as the current Repo rate remains low by historical standards, financing conditions might not discourage a recovery in private investment from late 2022.