By James Mathew
The projected increase in demand for petroleum products comes on the back of a steep 62% fall in crude and petroleum products imports by India in April-June 2020
Covid-19 is changing the way Indians commute, with more and more people opting for travelling in the comfort of their own private vehicles, a trend that is expected to push up domestic demand for petrol - and India's crude imports - significantly in the coming months.
India meets over 82 percent of its crude requirements through imports, with Middle East countries such as Saudi Arabia and UAE accounting for a large chunk of the imports.
Oil industry experts and analysts said aside from the growing trend of use of private vehicles, Indian government’s plans to accelerate economic activities will also lead to a significant jump in India’s crude import in the coming months.
“Already we are witnessing a surge in the use of both 2-wheelers and 4-wheelers on the Indian roads across cities and towns as people have been shunning use of public transport to commute,” Tsunduru Muralidhar, an independent energy consultant and a leading Indian energy expert, told Arabian Business.
“Going forward, this trend (use of private vehicles) is only going to go up as people want to be safe (from Covid-19), which will lead to increased demand for petroleum products in India, and by extension India’s import of crude” he added.
Significantly, the projected increase in demand for petroleum products comes on the back of a steep 62 percent fall in crude and petroleum products imports by India during the April-June 2020 quarter.
“The fall in crude imports by India in the April-June 2020 period was because of the combined effect of a steep fall in international crude prices and a plunge in domestic demand due to the nationwide lock down during the first half of the quarter,” Kalpana Jain, energy sector analyst with Deloitte India, told Arabian Business.
“With the expected pickup in economic activities in the coming months, coupled with the surge in use of personal vehicles for commuting, India’s crude import is bound to see a jump in the coming quarters,” Jain said.
The anticipation of a surge in passenger vehicles is reflected in the recent decisions of many automobile manufacturers in India handing out decent salary increases and promises of increased bonuses this year to their employees.
This has also seen share prices of many auto majors registering robust gains on Indian bourses of late.
Muralidhar said another factor which will push up India’s crude imports is the steady decrease in the domestic production of this vital commodity.
India’s crude production during April-May this year declined by 6.71 percent to 5148.22 TMT from the year-ago period, according to the latest data available on India’s petroleum ministry website.