China is facing one of the longest deflation streaks since 1993, affecting everything around, including oil prices. 

According to one of the world’s biggest oil traders is expecting a significant drop in global crude oil price, between $60 and $70 a barrel. This may result in a windfall for India as it relies on imported crude oil for over 80% of its needs. 

China’s gross domestic product deflator, which is a broader measure of prices, has seen a five-quarter decline and also indicates that the downtrend may continue. 

China’s oil consumption grew rapidly between 2013 and 2023, increasing by 600,000 barrels per day on average. However, due to economic challenges, growth is expected to slow significantly, with the International Energy Agency predicting an increase of just 180,000 barrels a day in 2024. 

India is now set to become the fastest-growing oil consumer, with a projected rise of 200,000 barrels per day. As Chinese demand decreases, oil prices may drop below $70 a barrel, which could reduce India’s import bill substantially.

India’s crude oil import bill increased by 15% in the five months ending August 2024, reaching $60.6 billion. A drop in oil prices to $70 per barrel would result in a significant saving for India, with a potential $15 reduction from the Reserve Bank of India’s estimated $85 for FY25. 

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