India's crude demand to show resilience against third COVID-19 wave

27-01-2022

The surge in COVID-19 infections in several cities in India is likely to hit oil product consumption, but industry sources said crude demand may not see an immediate impact as the third wave of the virus is likely to lead to less severe restrictions compared to the second wave in 2021.

S&P Global Platts Analytics said India's oil demand in the second half of 2022 is expected to be around 283,000 b/d higher than in H1. "[This would be] driven by a more broad-based pickup in economic activity amid an improving COVID situation and widening vaccination rollouts," JY Lim, oil markets adviser at Platts Analytics, said, adding that crude imports are expected to rise further on the back of improving demand.
Based on the latest development, Platts Analytics revised India's 2022 oil product demand forecast to 270,000 b/d, down by 30,000 b/d from an earlier projection, though the full impact of the omicron variant is still being assessed.
OPEC said Jan. 18 that the economic recovery momentum in India has been slowing since the third quarter of 2021 amid the new wave of infection, as well as lingering impact of the delta variant.

Gasoline may show resilience

India's gasoline complex might face some headwinds in the near term as state-wide lockdowns threaten mobility, but sources were hopeful that demand-side recovery would continue an upward trajectory when infection rates go down.
S&P Global Platts data showed that the FOB Singapore ultra-low sulfur diesel cash differential is averaging a premium of $1/b to the Mean of Platts Singapore gasoil assessment over January, up from 64 cents/b averaged over December.

Turbulent recovery for jet fuel

Asian jet fuel market sources said that while India's consumption of the product has been growing due to robust demand for domestic travel, this could pare back in the months ahead due to rising infection rates driven by the omicron variant as well as travel restrictions. India's domestic jet fuel consumption rose 9.52% month on month to a 22-month high of 552,000 mt in December, Petroleum Planning & Analysis Cell data showed, with climbing COVID-19 vaccination rates boosting year-end domestic travel.

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