India is expected to overtake China by 2027, in terms of annual growth in demand for crude oil, aided by growing industrial and economic base as well as rising urbanisation and expanding middle class, the International Energy Agency (IEA) said on Wednesday.

“The fastest-growing economy in the world, with GDP growth averaging 6.9 per cent for 2024-2028, is aided by benign demographics,” the agency said.

India surpassed China to become the world’s most populous country in 2023. Although its rate of expansion has been slowing for decades, population growth will likely not peak until 2065, IEA added. Propelled by trends such as urbanisation, industrialisation and the emergence of a wealthier middle-class keen for mobility and tourism, IEA said the Indian oil demand will grow by more than 1 million barrels per day (mb/d) between 2022 and 2028.

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Gasoil, the main fuel by far, will see its share of the product mix climb from 32 per cent to 35 per cent over the forecast period. Activity and trade in the rest of Southeast Asia are set to benefit from India’s upbeat economic prospects. For instance, Malaysia and Indonesia are seeing similar increases in oil consumption — of about 20 per cent between 2022 and 2028.

China factor

The IEA said China will continue to account for around one-sixth of the world’s oil demand and half of the global oil consumption growth, as its use expands by 2.9 mb/d between 2022 and 2028. However, this is heavily front-loaded: after a massive 1.5 mb/d rebound post-lockdowns in 2023, oil demand growth decelerates to roughly 290,000 b/d y-o-y on average from 2024 to 2028.

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“This slowdown corresponds with China’s economy proceeding along a path of structurally lower GDP growth as its era of double-digit economic expansion now having conclusively ended. Its present target of 5 per cent per year stands in marked contrast to the average 9 per cent since the country embarked on its shift from a planned to a market economy in 1978. GDP growth is set to decelerate further towards 4 per cent at the end of the forecast period,” the agency added.