India slowdown hits global oil demand

London: India’s oil consumption is growing well below its long-term trend as the country struggles with a widespread economic slowdown, including a slump in new vehicle sales.

The slowdown is part of a worldwide economic deceleration, which is weighing heavily on the motor industry. But because India has been so important for growth in oil demand over the last two decades, its downturn is materially shifting oil’s global production-consumption balance and weighing on prices.

India’s slowdown threatens to trim at least 100,000 barrels per day (bpd) from global consumption growth in 2019, pushing world growth down to 1 million bpd or less this year.

In the last two decades, India’s consumption incr-eased at an annual average rate of around 5 per cent compared with a worldwide average of 1.5 per cent, making the country a major source of incremental demand.

It accounted for almost 13 per centof worldwide consumption growth between 1998 and 2018, rising to 18 per cent between 2013 and 2018. But the country’s consumption was up by just 1.45 per cent in the three months from June to August compared with the same period a year earlier, down from more than 8 per centyear-on-year at the start of 2018.

Petrol, used by private motorists, is now growing less than 10 per cent year-on-year, down from more than 13 per cent in the first quarter of last year, according to the Ministry of Pet-roleum and Natural Gas.

Diesel is increasing by just 1.3 per cent, down from more than 9 per cent in early 2018.

— Reuters