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IEA Forecasts India as Leading Contributor to Global Oil Demand Growth Until 2030

ByDayne Lee

Feb 11, 2024

IEA Forecasts India as Leading Contributor to Global Oil Demand Growth Until 2030

At the India Energy Week held in Goa, the International Energy Agency (IEA) unveiled a report indicating India’s pivotal role in shaping the future of global oil demand. According to the IEA, from 2023 to 2030, India is poised to surpass China as the principal driver of global oil demand growth, reflecting the country’s expanding economic and energy needs.

India’s Growing Oil Demand

India, currently the world’s third-largest oil importer and consumer, is expected to see its oil demand surge by nearly 1.2 million barrels per day (bpd) within this period. This increase represents over a third of the anticipated global growth of 3.2 million bpd. By 2030, India’s oil demand is forecasted to reach 6.6 million bpd, up from 5.5 million bpd in 2023, positioning India at the forefront of global oil demand expansion.

The report highlights diesel fuel as the primary component of India’s rising oil consumption, accounting for almost half of the nation’s demand increase and over one-sixth of the total global oil demand growth through to 2030. Additionally, jet fuel consumption in India is expected to grow by an average of 5.9% annually, albeit from a lower starting point compared to other countries.

Transportation Fuels and Electrification

Keisuke Sadamori, the IEA’s Director of Energy Markets and Security, noted India’s unique position compared to China and other economies, emphasizing the continued need for transport fuels in India. This contrasts with the slowing growth in developed economies and China, where demand is expected to decline.

However, the shift towards electric vehicles and energy efficiency improvements is predicted to moderate the growth of gasoline demand to an average of 0.7% annually through 2030. The adoption of new electric vehicles and advancements in energy efficiency are projected to offset 480,000 bpd of potential oil demand.

To accommodate the rising demand, India plans to augment its refining capacity by 1 million bpd over the next seven years, further increasing its crude imports to 5.8 million bpd by 2030. Industry leaders, including Prasad Panicker of Nayara Energy and G Krishnakumar of Bharat Petroleum Corp, echoed the sentiment of India’s refining sector moving in the right direction with substantial capacity additions.

Petrochemical Demand and Oil Consumption

The petrochemical sector is also expected to contribute significantly to India’s oil demand growth, with demand closely tied to the country’s Gross Domestic Product (GDP). Indian Oil Corp’s executives anticipate an uptick in all oil product sales through March 2025, underscoring the broad-based nature of India’s oil demand surge.

The IEA’s report also provided insights into India’s oil inventories, estimated at 243 million barrels, including strategic petroleum reserves. With these reserves, India’s oil import requirements are set to rise sharply toward 2030 and beyond, highlighting the strategic importance of building and maintaining robust oil stockpiles.

Table: Overview of India’s Oil Demand Growth and Sectoral Consumption

SectorGrowth DriversProjected GrowthImpact on Global Demand
Diesel FuelTransportation and industrial useNearly half of India’s increaseSignificant share of global growth
Jet FuelAviation sector expansion5.9% annual growthFrom a lower base compared to other nations
GasolineElectrification and efficiency gains0.7% annual growthMuted growth due to EV adoption
Refining CapacityMeeting domestic and export demand1 million bpd increaseIncreased crude imports
PetrochemicalsEconomic growth correlationDirectly proportional to GDPContributes to overall consumption increase

India’s trajectory as the main catalyst for global oil demand growth underscores the nation’s evolving energy landscape and its broader economic ambitions. As the world transitions to a more energy-diverse future, India’s strategies for managing its oil demand, expanding its refining capabilities, and embracing electrification will be critical in shaping both its own and the global energy economy. The IEA’s report serves as a testament to India’s growing influence in the global energy market, setting the stage for a dynamic decade of energy development and consumption.

Featured image credit: imaginima via Getty Images

Dayne Lee

With a foundation in financial day trading, I transitioned to my current role as an editor, where I prioritize accuracy and reader engagement in our content. I excel in collaborating with writers to ensure top-quality news coverage. This shift from finance to journalism has been both challenging and rewarding, driving my commitment to editorial excellence.