India is poised to become the leading driver of global oil demand growth over the next decade, surpassing China, according to a recent report by Moody’s Ratings. This shift is attributed to India’s robust economic expansion, increasing industrialization, and a growing middle class, while China’s oil demand is expected to plateau due to slower economic growth and the rapid adoption of electric vehicles.Deccan Chronicle
India’s Ascendancy in Global Oil Demand
Moody’s projects that India’s oil demand will grow at an annual rate of 3% to 5% through 2030, outpacing China’s growth, which is expected to slow significantly. China’s crude oil consumption is anticipated to peak within the next 3 to 5 years, driven by a decelerating economy and a shift towards cleaner energy sources.
In contrast, India’s economy is projected to grow at 6.3% in 2025 and 6.5% in 2026, making it the fastest-growing among G20 nations. This economic momentum, coupled with increased infrastructure development and rising vehicle ownership, is fueling higher demand for transportation fuels like petrol and diesel.
Expanding Refining Capacity and Import Dependence
To meet the surging demand, India is investing in expanding its refining capacity. The country’s refining capacity is expected to increase from 256.8 million metric tonnes per annum (mmtpa) in April 2024 to 309.5 mmtpa by 2030.
However, this growth comes with increased reliance on oil imports. India currently imports approximately 90% of its crude oil and about 50% of its natural gas requirements. If domestic production does not increase significantly, import dependence is projected to rise further.
Natural Gas: A Growing Component of India’s Energy Mix
India is also focusing on increasing the share of natural gas in its energy mix from the current 6% to 15% by 2030. This transition is driven by sectors such as fertilizers, petrochemicals, and city gas networks. Moody’s expects India’s natural gas demand to grow at an annual rate of 4% to 7% through the end of the decade.
Implications for Global Energy Markets
India’s emergence as the primary driver of global oil demand growth signifies a significant shift in the global energy landscape. As China’s demand stabilizes, India’s increasing consumption will play a pivotal role in shaping global oil markets, influencing investment patterns, and informing energy policy strategies worldwide.