India is expected to account for 25% of global oil demand growth in 2025.
As the energy market looks for clues on global crude oil demand growth in 2025, many are eyeing how things may unfold in India with China's consumption flattering to deceive.
In 2024, India proved to be a major driver of crude oil consumption as the International Energy Agency and the Organization of Petroleum Exporting Countries squabbled over their respective global demand growth projections, with the former offering figures shy of 1 million barrels per day and the latter eventually suggesting a figure closer to 2 million bpd.
The country is tipped to account for a major chunk of demand growth no matter where the figure eventually ends up once the final data for 2024 is in.
And according to the Energy Information Administration - statistics arm of the U.S. Department of Energy - India is poised to overtake China to account for a quarter of global oil demand growth in 2025.
The development may be eye-catching, but is somewhat unsurprising with an economic slowdown and shifting market dynamic in China, and relatively high economic growth in India.
China's oil consumption grew by more than India's in almost every year from 1998 through 2023, with Beijing's consumption also regularly growing more than any other country during those years.
But in 2025, India may account for 25% of total oil consumption growth globally, the EIA recently noted, against its projected global demand growth figure of 1.3 million bpd for the year.
"Driven by rising demand for transportation fuels and fuels for home cooking, consumption of liquid fuels in India is forecast to increase by 330,000 bpd in 2025 (from 220,000 bpd in 2024)," it observed in its latest year-ending "STEO" or short-term energy outlook.
That growth is the most of any country in the EIA's forecasts in each of the two years. By contrast, it predicted China's liquid fuels consumption to grow by 90,000 bpd in 2024, before increasing by 250,000 bpd in 2025.
"In China, rapidly expanding electric vehicle ownership, rising use of liquefied natural gas for trucking goods, a declining population, and decelerating economic growth have limited consumption growth for transportation fuels," the EIA noted further.
Most of the growth in China is seen to be coming from the increasing use of oil for manufacturing petrochemicals. Of course, although India's demand growth in percentage and volume terms exceeds China's growth in the EIA's forecast, the latter still consumes significantly more oil.
Total consumption of liquid fuels in India was 5.3 million bpd in 2023, while China consumed more than triple that amount at 16.4 million bpd in 2023, based on EIA estimates in its December STEO.
Carrying Global Market Hopes
Industry projections lend further weight to assertions that India may well carry the hopes of the wider crude market.
In September, the country's minister for petroleum and natural gas Hardeep Singh Puri predicted precisely what the EIA has forecast in terms of Delhi's contribution to demand growth.
"The Indian economy will account for 25% of the near- to medium-term global increase in demand over the coming years. We are a large importer and find there is no shortage crude in the world," Puri said at energy conference Gastech 2024 in Houston.
Going by that logic, and cognizant of his country's position as a key driver of global crude oil demand growth, Prime Minister Narendra Modi's government diversified India's pool of suppliers from 27 to 39 countries in 2024. Doubtless, many more will be hoping to join the club, crude supply logistics permitting.
