New Delhi: India’s fuel demand will grow by 3.2% next year, accelerating from the revised 2% rise expected in 2010, the International Energy Agency (IEA) said in its monthly Oil Market Report on Tuesday.
The Paris-based agency, which had previously forecast Indian fuel consumption to rise by 1.9% this year, said New Delhi’s move to hike retail prices was unlikely to significantly affect fuel consumption in the short term.
India’s Oil Secretary S. Sundareshan also said on Tuesday that local demand for gasoline and diesel had not declined despite the recent hike in fuel prices.
The IEA said India’s fuel demand will grow by 65,000 barrels per day (bpd) this year to about 3.33 million bpd. Next year fuel demand would grow by 107,000 bpd to 3.43 million bpd.
It expected global oil demand growth would slow next year, leaving the market with comfortable supplies until at least the middle of next year.
Last month India freed gasoline prices from government controls and raised the price of other fuels.
“In terms of demand, these price changes are unlikely to have a significant impact in the short term, as Indian oil demand growth has been related largely to rising incomes — and as such is highly price inelastic,” the report said.
Asia’s third largest economy consumed 6.3% more fuel in May than a year ago at 12.38 million tonnes.
The IEA said that in the longer term India’s fuel demand would become more sensitive to global crude oil prices, “setting the stage for efficiency gains and more rational energy use.”