India oil demand seen recovering in 2H 2021

India's oil demand may recover to pre-pandemic levels by the second half of this year, if there are no new major lockdowns in the country, Shelly Abraham, general manager of crude trading at state-controlled refiner Bharat Petroleum has said.

Indian demand for major oil products, such as gasoline and diesel, has rebounded from low levels seen in April 2020, although jet fuel demand remains weak.

"We saw in April 2020, at the peak of Covid-19 demand destruction, Indian diesel demand went down by almost 55pc year on year, gasoline demand fell by around 60pc and jet fuel demand fell by a whopping 90pc. But from that very low level, demand has picked up a lot over the past eight to nine months," Abraham told Argus in an interview.

"In December, India's demand for gasoline increased by about 9pc and diesel demand was down by only 2.7pc year on year, so it is almost back to normal. Indian jet fuel demand in December was still 40pc lower year on year but this is a global issue and it is expected to take some time for jet fuel demand globally to recover."

"The vaccine rollout or another potential lockdown will be the two key factors that could have an impact on the normalisation of demand, positively or negatively. But if the current situation prevails, we believe total Indian oil demand should fully recover by the second half of 2021," Abraham said.

India's demand is on the slow path to recovery, with diesel demand in the first half of January still down compared with the first half of December. Indian demand for diesel in December declined by 3pc from a year earlier, to 1.73mn b/d from 1.78mn b/d according to the oil ministry, although gasoline use rose by 9pc to 736,000 b/d from 674,000 b/d a year earlier.

India posted its first ever yearly contraction in overall fuel demand in 2020, down by 11pc because of Covid-19 lockdowns that stalled the Indian economy.

Subscribers to Argus Global Markets can click here to read the full Q&A with Shelly Abraham, who will be one of the speakers at the Argus Crude Live virtual conference taking place over 26-28 January 2021. For full details of the conference programme and how to register to attend, please visit our event page.

By Azlin Ahmad