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India’s Crude Oil Imports: Bullish Catalyst for the Crude Oil Market

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Aug. 3 2016, Published 8:22 a.m. ET

India’s crude oil imports 

In this part of the series, we’ll look at India’s crude oil imports over the long term.

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India’s crude oil imports

  • The International Monetary Fund estimates that India’s economic growth will outpace China in 2016 and 2017. India’s GDP grew by 7.6% in 2015, while China grew by 6.9% for the same period. As a result, India’s crude oil imports will rise by 11% in 2016—compared to 2015. The rise in domestic crude oil demand will see India increase its crude oil imports from countries like Saudi Arabia, Iraq, Venezuela, Nigeria, and Iran.
  • India’s crude oil imports rose by 13% to 4.3 MMbpd (million barrels per day) in June 2016—compared to the same period in 2015. The International Energy Agency reported that India will account for 25% of the global crude oil demand growth until 2040. To learn more, read India’s Crude Oil Demand Will Likely Drive the Crude Oil Market.
  • The U.S. Energy Information Administration reported that India plans to build three SPRs (strategic petroleum reserves) in 2016. The expected capacity of the SPRs is 39.1 MMbbls (million barrels) of crude oil. Most of these facilities will be completed by the end of 2016. India is also planning for the second phase of SPR capacity of 91 MMbbls by 2020. This will drive the demand for crude oil.

Volatility in oil prices impacts producers’ margins such as Goodrich Petroleum (GDP) and Bonanza Creek Energy (BCEI). It also impacts ETFs and ETNs including the VelocityShares 3X Inverse Crude Oil ETN (DWTI) and the Vanguard Energy ETF (VDE).

In the next part of this series, we’ll look at more bullish drivers for crude oil prices.

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