MTE - MANAGERIAL ECONOMICS (MBA-103)

DELHI SCHOOL OF MANAGEMENT

(DELHI TECHNOLOGICAL UNIVERSITY)

Submitted By : Aman Kumar

(2K21/DMBA/23)

UNDERSTANDING CRUIDE OIL DEMAND

In a report published in January 2019, Wood Mackenzie, a global research

and consultancy group, commented that with a consumption of 245,000
barrels per day (bpd), India’s crude oil demand was 14 per cent of the
global demand, the second highest demand globally behind the US and
ahead of China.
In August 2018, the Organization for Petroleum Exporting Countries
(OPEC ) projected that India’s oil demand would rise by 5.8 million bpd
by 2040, accounting for about 40% of the overall increase in global
demand during the period. Analysts were of the opinion that the crude oil
market in India, at times, showed a positive relationship between the
market price and quantity consumed, defying the law of demand where
there was a definite inverse relationship between the market price of a
product and the quantity demanded of that product, other factors held
constant. Moreover, the change in quantity demanded of oil in the market
was not uniform with the change in price. In addition, there were factors
other than price like increased incomes and the availability of cost
effective substitutes that influenced the demand for oil.

Keywords :Crude oil demand; Law of demand; Demand functions;

Exceptions to the law of demand; Shifts in demand; Movement along the
demand curve; Fluctuations in oil price; Price elasticity of demand;
Income elasticity of demand; Cross price elasticity of demand; Derived
demand; Giffen Good; Non price factors of oil demand; Infrastructure
development and demand for oil.

Objectives : in reference of case

• To understand the law of demand

• To understand the exceptions to the law of demand
• To analyze the demand function and shifts in demand (changes in
quantity demanded and changes in demand)
• To understand the types of elasticity of demand
• To understand Giffen goods and derived demand