India to Benefit Most from Depressed Global Oil Price Scenario
India stands to benefit the most from the drop in oil prices since the beginning of the year, as the impact of the Coronavirus epidemic in China weighs on global oil demand growth projections. OPEC and the International Energy Agency (IEA) both published reports last week cutting their respective oil demand growth forecasts for 2020, which is likely to ensure continued downward pressure on prices in the near-term. India, the world’s third largest consumer of oil, currently imports about 85% of its crude requirements, and spent approximately US$112 billion on oil imports during the last fiscal year. With the oil market currently in contango, major Indian oil importers led by state-owned refining companies such as Indian Oil, Hindustan Petroleum, and Bharat Petroleum, as well as private refiners such as Reliance Industries are looking to negotiate better long-term deals with Middle Eastern producers to lock-in lower prices. In addition, India also plans to boost crude oil imports from Russia’s Far Eastern region as part of a recent bilateral initiative to boost trade between the countries, with an agreement on oil supplies likely to be signed during a planned visit by Russian President Vladimir Putin to India in October.