An Investigation on the Determinant Factors of India Oil Demand and Short-term Supply Forecast of Iran's Oil to This Country Over 1970-2005

Eiarnination the oil market and review the major oil importer countries, is a major need for guidance and marketing strategy for crude oil exporting countries. So that estimating the oil demand for importer countries and analysis the effective factors on their oil demand, can be an important factor in planning and policy making for oil exporting countries in order to sell oil. So Iran is not an exception from this issue. Given that, Iran is one of the major oil exporters and oil has the highest share in exports, hence the need is felt in the cause of numerous works done in this area. Therefore, in this paper oil demand in India that the major buyers of Iranian crude oil and can be as developing country should be examined. To do this, first most important and effective variables on oil demand are investigated. These variables include GDP, price of crude oil and share of transportation sector and industry in GDP. In this paper, we survey the structure of the energy market in India, then according to the market, suitable model for this country's crude oil demand are designed. We gathered the data and tested these data for cointegration and stationary. Then we estimated the oil demand function for India. The results indicate that all coefficients have the theoretically expected sign. Price elasticity is 0.09 and the income elasticity is 1.08. Variables of industry, transport and oil consumption in previous period were not significant.