High crude prices may curb demand: India

new delhi — The world’s fastest growing crude consumer has a suggestion for Opec: Start reducing prices, or waning demand will mean a curb in purchases from the crude group.

At least that’s the suggestion from Sanjiv Singh, chairman of Indian Oil Corp, the country’s biggest refiner. If prices continue rising at the pace they’ve been gaining in the past month and a half, the South Asia nation’s consumers will likely see alternatives such as electric vehicles and gas as more cost effective, replacing 1 million barrels of the country’s daily oil use by 2025, he said. “Demand

demand cannot be seen in isolation to prices, especially for a price sensitive market like India Sanjiv Singh, Chairman, Indian Oil Corp

cannot be seen in isolation to prices, especially for a price sensitive market like India,” Singh said. “You may not see an impact on demand in the short term, but in the long term, definitely it will have implications.”

Fears of a global supply crunch following outages from Libya and

Venezuela to Canada have led to an almost 5 per cent jump in oil since April. While the Organisation of Petroleum Exporting Countries and its allies have agreed to boost curbs to alleviate tightness, concerns remain that the additional barrels won’t be enough to meet growing demand, spurring US President Donald Trump to launch a series of tweets against the group.

Singh says expectations that India’s oil consumption will grow to 10 million barrels a day by 2040, making it the fastest growing consumer worldwide, is based on the assumption that prices will be at $83 a barrel by 2025 and $113 by 2040. But with crude already near $80, it’s likely that the cost will be seen as too expensive, reducing demand in the next seven years, he said.

“If instead of $83, prices reach $100 by 2025, then other forms of energy will become more competitive,” Singh said.

India has a vested interest in lower oil prices. With little of its own natural resources, the country imported about 1.6 billion barrels (220.43 million tons) of oil last year, or about 80 per cent of its crude requirements, mostly from Opec nations.