India’s oil consumption is expected to 7-8 per cent this year, outpacing China’s demand growth for the third consecutive year, as impact of demonetisation is likely to be short-lived, according to Platts.
LPG and transport fuels demand will rise, while new petrochemical projects would a boon for naphtha demand.
“The dramatic rise in India’s oil demand shows no signs of faltering… the country will remain a driver of Asian growth in 2017.
The cash crunch following move to demonetise 86 per cent of currency is expected to “temporarily dampen the country’s appetite for oil products in the first quarter, or maybe a little longer,” it said.
“But gains in oil demand that the country is set to achieve from the ‘Make in India’ initiative — which aims to raise the share of manufacturing in GDP over the next few years — will more than offset the negative effects of demonetisation,” Platts quoted analysts as saying.
“For the third year in a row, India’s oil demand growth will outpace China’s demand growth,” Platts Analytics said, adding that it was expected to grow at about 7 per cent to 4.13 million barrels per day in 2017, compared with 3 per cent in Chinese oil demand to 11.5 million bpd.
“While growth fundamentals for oil in India remain high, slower growth in the initial months of 2017 because of demonetisation might pull down the overall oil demand growth in 2017 to a shade below 2016 ..