India's Oil Demand Growth Could Disappoint Market Bulls
India is overtaking China as the world's biggest oil demand growth driver in a momentous shift in the oil market where China dominated growth in the past two and a half decades.
While India's growth rate is ahead of China's, Indian volumes aren't anywhere near the Chinese boom in consumption that began in the early 2000s. And they never will be.
With the pace of Chinese growth decelerating and India's accelerating, market bulls are correct to expect that India will lead demand growth numbers. But they could be disappointed that Indian demand growth isn't soaring at a pace similar to China's. In the period 2000-2025, Chinese demand growth averaged 485,000 barrels a day (bpd), as pointed out by Bloomberg Opinion columnist Javier Blas.
India's total oil demand is about 6 million bpd at present, and it is growing at around 200,000 bpd every year. This is less than half of China's booming annual demand growth in the 2000s and 2010s.Since the COVID slump in demand everywhere, India's oil consumption growth has settled at about 150,000 bpd to 200,000 bpd each year. It's expected to continue at around these levels, forecasters say.
China, for its part, faces major structural shifts in its economy and transportation sector, with slower GDP growth, a weak property market, and booming electric vehicle sales and sales of trucks running on LNG that are displacing part of the gasoline and diesel consumption.
India surpassing China as the world's top driver of oil demand growth isn't surprising at all. The surprise, if any, came from the fact that this is happening a bit earlier than many forecasters had expected a year or two ago.But key to looking at this shift is to see that China's oil demand growth is slowing while India's isn't soaring. Indian demand is rising, but not anywhere close to the Chinese boom of the past two decades.
So, those who expect India to be the 'next China' could be in for a disappointment.Oil demand growth in China will be just 1.5% this year compared to 2024, according to OPEC's latest Monthly Oil Market Report. India's demand will grow by 3.4%-- so the growth in India is higher than in China. But China is expected to consume more than 16 million bpd of oil this year, compared to India's 6 million bpd.
In India, oil demand in March was slightly lower than in the same month last year, OPEC said in its report. Definitely not an estimate oil bulls, Saudi Aramco, or other oil companies wanted to hear.
Diesel and other transportation fuels will support India's oil product demand, which is expected to grow by 188,000 bpd this year from 2024 to average 5.7 million bpd, OPEC said in its report in May.
Next year, oil demand is projected to grow by 246,000 bpd year-over-year to average 6.0 million bpd, 'supported by robust economic growth amid healthy transportation and manufacturing activities,' the cartel noted.
This should be good news about Indian demand growth, considering the volatile U.S. trade and tariff policy, which could quickly dampen economic and market sentiment several times by the end of this year alone.
But 246,000-bpd annual growth in India next year would compare to China's nearly 500,000-bpd growth in each of the years 2000 through 2025, with the exception of a couple of crises with the global financial crisis and COVID.
Now China's consumption of transportation fuels has peaked, many forecasters and state giant China National Petroleum Corporation (CNPC) say.
Some of the weakness in Chinese oil demand growth has been attributed to China's weaker economic performance over the past year. But the shift toward EVs and LNG trucks is removing some road fuel demand permanently, analysts say.
India could see an acceleration of oil demand growth in the next decade as incomes rise and consumers spend more on consumer goods.
India will be the fastest-growing oil demand region among large economies, Nikhil Bhandari, Co-head of APAC Natural Resource & Clean Energy Research at Goldman Sachs, told CNBC earlier this week.
Income growth and rising manufacturing will result in India accounting for a third of global oil demand growth over the next decade, Bhandari said.
As a rule of thumb, at a certain level of income growth, there is acceleration of oil demand as consumers buy more consumer goods apart from staples, the expert noted.
And India is currently at an inflection point of income growth, which would accelerate oil demand growth over the next decade, according to Goldman Sachs's Bhandari.
Although India's growth in percentage terms exceeds China's growth pace, China still consumes significantly more oil—around triple the total amount India uses. And when the biggest oil importer in the world, China, begins to see slowing growth, India isn't able to offset the slowdown or replicate the boom in demand.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.comRead this article on OilPrice.com
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
30 minutes ago
- Yahoo
Opinion: Don't forget the garden when selling your house
Sellers can't afford to neglect their outside space, says Clive Hedges of Arnolds Keys. Last week saw people from all over the world flock to the Chelsea Flower Show, which has been held at the Royal Hospital in Chelsea since 1912, a longevity which is testament to Britons' love of their gardens. Congratulations to Norfolk's Peter Beales Roses, which won its 30th gold medal at the show. As summer approaches, we shouldn't underestimate the importance of gardens when it comes to selling a home. They have always been important of course, but people's appreciation of their outside space certainly increased when everyone was confined to their homes during the Covid pandemic. That's why staging your garden is every bit as vital as preparing the interior of your home for viewings. You need to help your potential buyers visualise themselves living in your home, and that includes helping them to imagine relaxing in the garden. There are, of course, some basic measures you need to take. Make sure you have cut the lawn, trimmed the edges and weeded the flowerbeds; you wouldn't conduct a viewing without vacuuming and dusting indoors, and the same level of housekeeping needs to be undertaken outside as well. Clive Hedges, manager at Arnolds Keys' Coastal Hub in Sheringham (Image: Arnolds Keys) Get out the pressure washer and clean the patio, and clear up any fallen leaves. Repair any broken fences, and touch up wood stain or paint where necessary. And make sure you have picked up any 'evidence' of your pet! Consider planting some flowers to give your garden some colour; this needn't be expensive and can pay dividends. Helping your buyers see themselves living in your outside space is about a bit more than simple tidying-up, important though that is. It doesn't take much to transform their view from a neat and tidy garden to an outside space which will fit in with their lifestyle. So make sure your patio furniture is set out, with cushions on the chairs and maybe some drinks on the table. Studies show that dining al fresco is what many people aspire to as soon as the weather turns warmer, so be ready to demonstrate what an attractive prospect that could be for them. You are trying to show what a wonderful life your prospective purchasers could have in your garden; you obviously can't guarantee the weather on the day of the viewing, but you can suggest to them what a relaxing time they will have when the sun does come out. Clive Hedges is manager at Arnolds Keys' Coastal Hub in Sheringham. For more information, please visit
Yahoo
33 minutes ago
- Yahoo
More money, more problems? Florida's budget battle belies chronic issues
Florida is flush with cash, but its public workforce is running on empty. The Florida National Guard has been helping staff state prisons for two and a half years. There's a teacher shortage and a nursing shortage. There are 1,800 troopers patrolling a state with 7 million vehicles and more than 140 million tourists per year. All this in a state in strong fiscal health with ample reserves and a lean budget compared to other large states. Federal stimulus funds from the COVID-19 era, combined with inflation that boosted its sales tax-reliant revenues, padded its coffers. That helped lawmakers set aside massive reserves, about $17 billion in the current year. For Republicans who have held the reins of the state for nearly three decades, it's a point of pride to have the lowest number of workers per capita and to have half of New York's budget with more people. Such fiscal restraint – Florida's constitution requires lawmakers to pass a balanced budget each year – helps the state avoid the deficits and woes of Democratic-run states like Illinois and California. Republicans, including Gov. Ron DeSantis, revel in the contrasts to those states and boast of the state's fiscal picture. 'We've been running major, major budget surpluses, certainly over the last four years,' DeSantis said at a March 10 event in Winter Haven. 'We're spending, this year, less money than we spent last year … we have the lowest footprint of government workers per capita in the entire United States of America.' But Republican legislative leaders, after deadlocking on budget negotiations that threw the session into overtime, are still trying to reach a deal on a final spending plan. The dispute, though, is over how much to permanently cut taxes to restrain spending growth, not over how to pay for pressing needs that have long languished as the state continues to grow. House Speaker Daniel Perez, R-Miami, pushed for a sales tax cut to keep spending contained. Florida's budget has grown from $82.6 billion in 2019 to $118.6 billion for the current year. But Sen. Ben Albritton, R-Wauchula, resisted the move, saying it would hamper lawmakers' ability to meet the needs of a growing state. When they first attempted a compromise that included a 0.25% cut to the 6% sales tax, DeSantis nixed it by pledging to veto the plan. He feared cutting the sales tax would crowd out his push for massive property tax reductions. Now, Perez and Albritton have a framework to resolve the budget differences, including a deal for $2.25 billion in permanent tax reductions, although the details of those cuts still need to be negotiated. For Democrats, stuck in superminority status in the Legislature, the fracas over the budget doesn't address chronic issues facing the state. 'There's actually investments, real investments that need to be made to ensure our government is functioning properly and I just don't think that this is the time to discuss cuts when we haven't adequately funded our schools, our prison system, our unemployment system,' said House Democratic Leader Fentrice Driskell of Tampa. 'It feels sometimes like the governor and legislative leadership don't really care how people are living; they just want to get what they want so that they can say that they got it. But how does that really help improve the lives of Floridians who are struggling to make ends meet?' To be sure, Republicans in recent years have put some money toward addressing the issues, putting more money towards pay for prison guards, troopers, teachers and to educate and train nurses. But the freeze on worker pay that lasted for years during and after the Great Recession left the state well behind the pay for competing industries in the private sector or other public entities. That led to massive turnover and shortages in vital areas. Inflation, too, has hampered efforts to provide competitive pay in several vital workforce positions. In September 2022, DeSantis issued an executive order to place National Guard members in prisons facing critical shortages of guards, known as correctional officers. The Department of Corrections (DOC) has faced chronic issues of turnover and trouble recruiting and retaining officers. A few years ago, the starting salary for a Florida prison guard was less than $33,000, and leaders at the DOC said they were competing with WalMart for workers. Lawmakers have tried to address the issue by giving pay raises to guards, boosting the starting pay by $15,000 in recent years. The raises have helped alleviate the issue. The Tampa Bay Times reported the number of vacant positions at state prisons has dropped from 5,000 to 1,000. But recruitment and retention problems have persisted, hampered by inflation, and staffing shortages could return if the Guard leaves. DeSantis issued four extensions of his order in the face of the problem, but the latest order is set to expire later in June. In budget talks, the Senate has offered to set aside $30 million to pay for a DOC deficit related to staffing, while the House wants $53 million for overtime pay. The Florida Highway Patrol, facing shortages of troopers, has relied heavily on overtime. During a March 11 meeting of a House budget committee, Dave Kerner – who heads the Department of Highway Safety and Motor Vehicles, which includes the FHP – told lawmakers his difficulty in retaining troopers. 'We spend an inordinate amount of money on overtime because of the low staffing we have at the Florida Highway Patrol,' Kerner said. 'Because of the lack of pay the lack of career development plan it is much more efficient for a trooper to come and work at the Florida Highway Patrol, get trained and then three years later leave to a better paying department and so we have to supplement that vacancy rate with overtime,' he added. He was responding to Rep. Randy Maggard, R-Dade City, who blanched at the $10 million price tag for overtime for the nearly 1,800 troopers. Kerner said there were 288 vacancies, including 138 vacancies of sworn patrol officers as of March 1 at FHP. Legislators have put more money into raises and bonuses for troopers in recent years, and DeSantis has called for pay raises of 20% and 25% for entry level and veteran law enforcement officers, respectively, including state troopers. But the House has resisted the raises for FHP, as well as nearly $10 million to replace and upgrade part of FHP's fleet of vehicles. A January report from the Florida Education Association, the state's largest teachers union, showed 3,197 teacher vacancies in public schools. The number was down from about 4,000 the year before, showing improvement but union officials still were alarmed at the 16% rise in teachers in charge of classes without a certification in that subject area. Prodded by DeSantis, lawmakers have put more money into teach salaries since he took office in 2019, raising annual pay by $1.25 billion per year. In ongoing budget talks, the House has offered to increase that by $91 million. The Senate prefers a $100 million increase. Those increases, though, haven't kept up with other states, which have also boosted average teacher salaries, leaving Florida near the bottom for pay among state. Inflation has also eaten into the nominal gains. Lawmakers also have tried to address projected shortages of nurses. A 2021 analysis by the Florida Hospital Association estimated a shortage of 59,100 nurses by 2035, as Florida continued to grow – and age. But an association report from September showed progress – vacancies and turnover were down significantly compared to the prior year. And the Legislature had passed the Live Healthy Act, which put $716 million to boosting health care access and expanding the health care workforce. In the latest budget talks, however, the House has sought to cut the $30 million boost to the Florida Reimbursement Assistance for Medical Education (FRAME) program in the Live Healthy Act. It offsets loans and expenses for those seeking degrees and licenses in the medical, nursing, dental and mental health fields. Gray Rohrer is a reporter with the USA TODAY Network-Florida Capital Bureau. He can be reached at grohrer@ Follow him on X: @GrayRohrer. This article originally appeared on Tallahassee Democrat: In DeSantis' Florida, state budget booms as public workforce runs dry
Yahoo
33 minutes ago
- Yahoo
De Beers draws interest from billionaire Agarwal, Qatari funds, sources say
By Clara Denina LONDON (Reuters) -Diamond giant De Beers has drawn interest from at least six consortia, including billionaire Anil Agarwal, Indian diamond firms and Qatari investment funds, sources close to the companies told Reuters. De Beers is being carved out of Anglo American as the London-listed miner refocuses on copper and iron ore but the move comes with global diamond prices under pressure. Agarwal, chairman of Vedanta Resources, which has mines in Zambia and South Africa, is among the interested parties, as part of a bigger group, two sources said. Anglo and Agarwal both declined to companies including KGK Group and Kapu Gems, which dominate the domestic cutting and polishing trade, and are De Beers's biggest customers, have also expressed an interest, two sources with knowledge of the matter said. KGK Group and Kapu Gems did not respond to requests for comment. Anglo American, whose book value for De Beers stands at $4.9 billion, following $3.5 billion in impairments over the last two years, said it has retained financial advisers Morgan Stanley, Goldman Sachs and Centerview to help with a sale or a demerger and potential listing. Sign in to access your portfolio
