India's oil demand to rise at fastest pace in world: OPEC

India's oil demand will rise by the fastest pace globally this year and the next even as its economic expansion has slowed down, oil producers cartel OPEC said on Wednesday.

In its monthly World Oil Demand report, OPEC said India's oil demand is projected to rise by 3.21 per cent to 4.88 million barrels per day (mb/d) in 2019 from 4.73 mb/d in the previous year. In 2020, it will further rise by 3.36 per cent to 5.05 mb/d.

This outpaces China's oil demand growth of 2.73 per cent in 2019 and 2.37 per cent in 2020. China, however, is the world's second-biggest oil consumer at 13.06 mb/d in 2019, behind only the US whose consumption is projected at 20.94 mb/d.

World oil demand in 2019 is expected to grow by 1.02 mb/d, which is 0.08 mb/d lower than the previous projection, OPEC said.

"The drop can be attributed to weaker-than-expected data in 1H19 from various global demand centres and slower economic growth projections for the remainder of the year," it said. "In 2020, world oil demand is projected to increase by 1.08 mb/d. This also represents a downward adjustment of 0.06 mb/d from the previous assessment, mainly to accommodate changes to the world economic outlook for 2020."
"Fixing India's weak growth has become the highest priority while a benign inflation outlook has given the central bank room to cut rates. Transmission remains inadequate, monetary policy committee meeting minutes showed," OPEC said. "The government was looking into policy issues such as exempting foreign portfolio investor trusts from recently imposed high tax, deferring a proposal to raise minimum public shareholding in listed companies to 35 per cent from 25 per cent and an easing of banking credit."
"It seems India's economic slowdown could continue for the next two to three years as the economy faces serious structural reform, which will hurt consumer demand and manufacturing," OPEC said. "Structural reforms - coveringlabour laws, taxation and the legal system also ease the path for India's businesses in the coming year."