India has witnessed more than 300,000 new coronavirus cases per day for nearly two weeks in what is a growing humanitarian crisis that could see the outlook for oil consumption worsening in the short term, before rebounding later this year.
“Looking at the situation now, it could take a couple of months to stabilize,” Malhotra said. “This quarter will be not so good for oil as regional lockdowns have restricted many activities. And there is more to come,” R.K. Malhotra, Federation of Indian Petroleum Industry (FIPI) Director General told Platts in an interview.
Indian Prime Minister Narendra Modi has urged leaders of the various states to focus on micro containment zones and use lockdowns only as a last resort. But many provinces are planning to implement regional lockdowns amid fears the situation could get worse.
S&P Global Platts Analytics has said that India would witness a year-on-year oil demand growth of 400,000 b/d in 2021, revised down from an earlier growth estimate of 440,000 b/d, as the country grapples with record COVID-19 cases.
Chris Midgley, global head of analytics at Platts, said last week that those numbers could possibly be revised down by another 20,000 b/d, but any further revision would depend on how the situation develops over the next few weeks.
But Midgley added that India would continue to reap the benefits of a robust world economy as industrial activity picks up across the globe. Oil demand could slow in the near term but there were enough conditions to believe that consumption would stage a robust recovery in the second half of 2021.
The world’s third-largest crude consumer and importer has expressed interest in buying Guyana’s Liza Crude as part of a long-term deal with the Guyanese government. The country is interested in working with authorities as well as commercial entities to forge an agreement that would facilitate these exports. OilNOW understands that no firm decision has yet been made by the Guyana government on crude exports to India. Natural Resources Minister, Vickram Bharrat, has told OilNOW the government’s primary objective is to sell its share of crude at market price where it will be able to maximise returns for the country.
The South American country is positioned to become a major oil producer in the Latin America region with output set to surpass the 1 million barrels per day mark by 2027.
India’s oil & gas demand is expected to increase nearly 3-fold from 229 million metric tons in 2018 to 607 million metric tons in 2040.