India is poised to emerge as the largest driver of global oil demand growth between 2023 and 2030, surpassing even China, the current top importer, according to the International Energy Agency (IEA). The IEA released this forecast during the India Energy Week in Goa, shedding light on India’s significant role in shaping global oil consumption trends.
India’s projected oil demand growth
The IEA anticipates that India will witness a substantial increase in oil demand, with a projected rise of nearly 1.2 million barrels per day (bpd) between 2023 and 2030. This surge is expected to constitute over one-third of the total global increase of 3.2 million bpd during the same period. By 2030, India’s oil demand is forecasted to reach 6.6 million bpd, up from 5.5 million bpd in 2023.
Dominance of diesel fuel
Diesel fuel is expected to be the primary driver of India’s oil consumption growth, accounting for almost half of the nation’s demand rise and more than one-sixth of total global oil demand growth until 2030, as highlighted by the IEA. Additionally, jet fuel is poised for a 5.9% annual growth rate, albeit from a comparatively low base compared to other nations.
Factors influencing India’s oil demand
Keisuke Sadamori, the IEA’s director of energy markets and security, emphasised that India’s economic trajectory necessitates a continued demand for transport fuels, setting it apart from countries like China. However, the electrification of India’s vehicle fleet is projected to moderate the growth of gasoline demand, with an average annual growth rate of 0.7% through 2030. The adoption of new electric vehicles and energy efficiency enhancements is expected to mitigate an additional 480,000 bpd of oil demand by 2030.
Infrastructure expansion and imports surge
To meet the escalating demand, India is gearing up to add 1 million bpd of new refining capacity over the next seven years. This expansion will lead to a surge in crude imports, expected to reach 5.8 million bpd by 2030, according to the IEA. Prasad Panicker, chairman of Indian refiner Nayara Energy, lauded India’s efforts in bolstering refining capacities, projecting that gasoline demand will continue to rise for decades to come.
Petrochemical demand and sales growth
G Krishnakumar, chairman of state-run refiner Bharat Petroleum Corp, highlighted the role of petrochemical demand in India’s oil consumption growth, stating that it is closely linked to the country’s gross domestic product. Executives from Indian Oil Corp echoed optimism, anticipating growth across all oil product sales in the fiscal year up to March 2025.
Oil inventory and import projections
The IEA report estimated India’s oil inventories at 243 million barrels, with strategic petroleum reserves accounting for 26 million barrels. The remaining stocks are held by the industry. With rapidly rising oil import requirements, India is poised to play an increasingly pivotal role in global oil markets in the coming years.
India’s trajectory towards becoming the largest driver of global oil demand growth underscores its evolving energy landscape and economic development. As the nation navigates the complexities of energy transitions and rising demand, strategic investments in infrastructure, petrochemicals, and refining capacities will be crucial in shaping its energy future and global positioning.