Asian oil market on upheaval; Credits to India and China

India oil corporation (IOC) is one of the largest producers in Asia, operating 11 refineries and a combined capacity of 80.7 million tons a year, which is third of India’s capacity The Dollar Business Bureau

India and China turning out to be larger consumers of oil in world beating Japan and inkling closer to US

India and China’s oil market has reversed the whole Asian market to a different level by beating one of the dominant player Japan and challenging yet another player, that is United States for the place of world’s biggest oil consumers. The oil consumption of both countries have tripled since 1990 to over 16%, coming close to the US which stands roughly at 20%, making it the world’s largest consumer of oil. “The oil consumption is one of the key components for the development of our economy. It has to be increased considering the production scenario in our country. It also one way enhances faster development of the economy,” said Mr NK Bhansal, Director of Oil refinery and Marketing, Petroleum Federation of India. However, the production of the petroleum in India has not seen any big change. Lack of proper investment and research have slowed down the production in the country. Bhansal added, “The production in India is not expected to increase for another ten years. Though there have been efforts to improve the production, lack of proper investment and establishment of better technology has not seen any great improvement.” India oil corporation (IOC) is one of the largest producers in Asia, operating 11 refineries and a combined capacity of 80.7 million tons a year, which is third of India’s capacity and almost the same size as that of US refinery Exxon. The decrease in the long- term deals and the push for more cash cargos have completely changed the way pricing is done in these regions and it has also established new trade routes. The changes came with the western major Shell, when the company complained that trading conducted by the Chinese company, meant that crude oil prices did not reflect the same in the market. Mr Bhansal opined that “The oil consumption in India has seen a new high in the last few years, and is likely to increase in another ten years because of the demand. The import in oil is more likely to see a great increase, however we cannot say that it will overtake US at this rate, because we are trying to increase the production of oil to a larger scale.” Japan, which was one of the largest consumers of oil got left out of the race with long term contracts, when China and India took lead by trading on spot basis and prioritizing the cost and flexibility over fixed shipment.

February 24, 2016 | 04:30pm IST

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The Dollar Business Bureau - Feb 24, 2016 10:57 IST

Asian oil market on upheaval; Credits to India and China

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