India, the world’s second largest crude oil importer, will account for one-third of the 3.2 million barrels per day (mb/d) of growth in oil demand between 2023 to 2030, surpassing China, the International Energy Agency (IEA) said on Wednesday. India, which currently consumes roughly 5 million barrels per day (mb/d), is expected to register an increase of 1.2 mb/d in the next seven years.
The IEA in a report said that India is forecast to be the single largest source of global oil demand growth from 2023 to 2030, narrowly ahead of China. Underpinned by strong economic and demographic growth, the country is on track to post an increase in oil demand of almost 1.2 mb/d over the forecast period, accounting for more than one-third of the projected 3.2 mb/d global gains.
India’s oil consumption is set to increase at a faster pace than other countries, in part, because the country is still in the initial stages of economic development, it added.
The agency expects demand to hit 6.6 mb/d in 2030, up from 5.5 mb/d in 2023. IEA’s Director Energy Markets and Security Keisuke Sadamori said that India’s demand growth will surpass that of China in 2027, but the world’s largest energy consumer will still be ahead of India in absolute terms.
This faster pace also reflects the emergence of a burgeoning middle class, characterised by higher living standards and changing spending habits.
Diesel leads growth
India’s momentous economic growth story has major implications for personal mobility, business activity and, therefore, transportation demand. The country’s exceptional road-fuel dominated growth profile results from these burgeoning requirements and the centrality of road vehicles to meeting them, the IEA pointed out.
Travel by road accounts for about 90 per cent of personal mobility and 70 per cent of freight movement.
“Indeed, these shares rose in line with India’s economic development in recent decades. Given the crucial importance of oil products for road fuels, this means that we anticipate the growth of India’s economy to translate into continued strong growth led by diesel.