Adam writes…We have long discussed the extremely positive demand trends taking place globally. The number of people around the world that are currently going through their period of accelerated oil demand growth (their “S-Curve” tipping point) has gone from a relatively stable 700 mm since 1960 to over 2.5 billion as India now enters its tipping point alongside China. We have never had so many people going through their period of intensive commodity demand growth at the same time and the impact cannot be overstated.
We first wrote about the rise of Indian commodity demand back in 2016 and we followed this up last year with a more in-depth analysis (please see our 4Q2017 letter). In February 2018, we traveled to India (our fifth trip in 10 years) and our visit confirmed our bullish outlook. After having long been dismissed as an immaterial source of resource demand, analysts are now finally coming around to the fact that Indian demand will accelerate materially from here. OPEC now predicts Indian oil demand will grow by 6 mm b/d over the next 22 years and our models suggest this could actually be too conservative. In August, oil consultants Wood Mackenzie predicted that India will overtake China as the world’s largest oil demand growth center by 2024. In order to meet future gasoline and diesel demand, Saudi Aramco has announced its decision to invest $44 bn in the Ratnagiri refining complex in India. When commissioned in 2022, it is expected to process 1.2 million barrels per day, making it as large as Reliance’s Jamnagar refinery (currently the world’s largest).
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Bloody good!!