Tradewinds: Indian Growth Set to Boast Crude Tankers

14 March 2016: “Poten & Partners describes this as ‘one of the more conservative forecasts’, with other analysts suggesting India’s development has characteristics that are ‘similar to those of China 10-15 years ago.’ China’s oil demand experienced a compound annual growth rate of 7.75% between 2000 and 2005, according to the US shipbroker.’If India were to start growing at those rates, this would provide a significant boost to both oil and shipping markets,’ it adds. “Poten says China’s rapid economic growth has been built on infrastructure, investment and manufacturing, areas in which India has ‘barely scratched the surface’. In 2015, India’s demand for oil products grew by more than 9%, or 318,000 b/d, with gasoline up an impressive 16%.Poten says demand growth could have been even higher if not for an increase in excise duty on gasoline and diesel that began in the second half of 2014.The US shipbroker says initial data for 2016 seems to indicate a ‘continuation of India’s growth momentum’. “Barclay’s Research recently said that India will see strong gasoline demand growth in 2016, driven by continued growth in passenger vehicle sales, expanding road networks and rising income levels. “Poten says that since India has limited oil reserves, with domestic oil production is less than 900,000 b/d, the country is a ‘significant – and growing – importer of crude oil’. ‘For 2016, Indian oil demand is forecast to grow by 300,000 b/d, while an additional 80,000 b/d will be added to the Strategic Petroleum Reserves,’ it says. ‘With domestic production reducing by 40,000 b/d, this will raise overall crude oil imports to above 4m b/d. India is now the world’s third largest importer of crude oil after the US and China’. In another positive for crude tankers, Poten says India has traditionally imported the majority of its crude oil from short-haul sources in the Middle East, but has started to diversify its supply sources in recent years. “Increasing imports from West Africa, Venezuela and small volumes from Mexico have benefited ton-mile demand for crude oil tankers,’ Poten says. ‘After the lifting of nuclear sanctions, India will likely import more crude oil from Iran, but it is uncertain which current supplier will see a reduction in demand as a result.'”