New Delhi, Oct 3: With a growth rate of 6% in the sector, India is expected to surpass China as Asia’s fastest growing oil market by 2018, says the latest report released by Moody’s.

Apart from India’s fuel market growing at a reasonable pace, the reason behind it being poised to surge ahead of China is due to the latter’s lacklustre growth in the sector.

The Chinese oil market has been wavering around 2.5-3 per cent in 2017-18, nearly half of the 6 per cent growth rate it maintained throughout 2016.

“As Chinese economic activity dials back, we expect its refined product demand growth will moderate to 2.5-3 per cent in 2017-18 which is nearly half of higher CAGR of 5 per cent in 2012-16. Still in absolute terms, China will still account for 48 per cent of Asian R&M demand growth in 2018,” the Moody’s report says.

The recent slump in Indian economy, if continued over a prolonged period of time, could deteriorate India’s prospects to emerge as the Asian leader in this sector. However, economic uncertainty looms over China as well, the report adds.

“Given the oil sector’s reliance on China and increasingly India, we believe demand would face considerable risks if economic growth weakens materially below our expectations,” it states.

As per the assessment of American Energy Information Administration, the overall demand in the fuel sector would grow at 2 per cent, which roughly translates to 34.6 million barrels in 2018.

The report also predicts a steadiness in the refining margin rates in both China and India. “Specifically, we expect the average Asian refining margins to be largely in line with the average of $6.2 a barrel for the last three years, but better than $5.1 per barrel in 2016,” it says.

The report concludes stressing that the “incremental growth” in refining capacity, over the next three years, would come from China and Vietnam. On pan-Asia level, it adds, the continent would remain a net importer of refined petroleum for the next five years since the growth in demand would be higher than increase in refining capacity.