Crude oil demand in India will take longer to recover than many hope for as the country braces for the worst recession in its history after a two-month lockdown.
Bloomberg reports, citing Indian oil industry executives, that demand for the commodity might take until the end of the year to return to pre-crisis levels after last month, fuel demand at one point dropped by as much as 70 percent.
Still, most of the demand will return before the end of the year, according to one executive.
“Demand is reaching 60% to 70% of normal, but it will take some time to get to pre-Covid sales,” the chairman of Hindustan Petroleum Corp., Mukesh Kumar Surana, told Bloomberg. “Over a period of two to three months, we should get back to 80% of normal sales. Beyond that, it will be slow.”
Earlier this month, reports said that fuel demand in India had plummeted by more than 60 percent in April, with gasoline sales slumping by 61 percent and diesel sales shedding 64 percent in just the first two weeks of the month.
Due to plummeting fuel demand and overflowing storage capacity, at least three oil refiners in India asked for lower crude oil imports for May from the Middle East, including from the world’s top exporter, Saudi Arabia.
These developments have suggested the recovery in oil imports could take long, too. Yet a report by Reuters citing shipping data obtained from unnamed sources had it that imports of crude oil last month were actually higher on the month, by 5 percent, to an average daily of 4.63 million barrels.
The country’s top supplier of crude oil was Saudi Arabia, replacing Iraq at the top spot thanks to the generous discounts the Kingdom offered Asian buyers to find markets for its surplus oil.
By Irina Slav for Oilprice.com
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