India’s refined petroleum demand growth forecast has been significantly downgraded, with Kpler projecting an increase of only 77,000 barrels per day (kbd) for the year, a sharp decline from the previous estimate of 128 kbd. This revision is attributed to rising crude oil import costs, a depreciating rupee, and government austerity measures aimed at managing inflation and foreign exchange reserves. With India relying on imports for 85% of its crude needs, the impact of global energy disruptions is being felt acutely, leading to increased pump prices and a shift in sourcing strategies to mitigate risks.

The downgrade signals potential challenges for sectors reliant on fuel consumption, particularly transportation. Gasoline and diesel demand growth projections have been slashed, reflecting weakening commuting trends and a slowdown in commercial activity. Additionally, India’s GDP growth forecast has been trimmed to approximately 6.2%, highlighting the broader economic implications of high oil prices and a widening current account deficit.

Market professionals should note that while the government’s austerity measures may not lead to outright demand destruction, they are expected to substantially slow India’s previously robust fuel growth trajectory, potentially influencing global oil prices and trade dynamics as India seeks to stabilize its economy amid rising costs.

Source: oilprice.com