India’s oil demand growth offers abundant opportunities for global suppliers

In a global oil market that continues to grapple with volatility and demand concerns, India has provided much needed relief to crude producers.

Last year, as China’s demand flattered to deceive and OECD market take-up remained lacklustre, India – with its burgeoning economy growing at around 6% – imported well north of 4 million barrels per day of crude oil.

That pace of importation will likely be maintained this year with most forecasters predicting an economic growth rate at par with last year, or even higher at around 6.5%. Furthermore, Prime Minister Narendra Modi’s administration also hopes to position India as an export hub of petroleum products and distillates, cracked by an estate of 23 refineries and counting.

Foreign direct investment is being courted to enhance India’s pipeline network and develop liquid exports infrastructure. Such developments may boost crude imports further. Consequently, India’s growing needs now regularly catch the eye of market statisticians and forecasters. 

India’s huge share of demand growth in 2025

A flurry of projections around the turn of year brought India’s growing market size into sharp focus yet again and made the energy world sit up and take notice.

In December, the Energy Information Administration (EIA) — the statistics arm of the US Department of Energy — predicted that India is poised to overtake China and account for a quarter of global oil demand growth in 2025, which it projected in the region 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 (up from 220,000 bpd in 2024),” the EIA added, in its final short-term energy outlook publication for last year.

Around the time, the Organization of Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) also chimed in with their 2025 projections for global oil demand growth of 1.45 million bpd and 1.1 million bpd respectively. While the forecasts varied, all three forecasters, and many others, pointed to India accounting for a huge share of the growth.

These predictions came in near tandem with, as well as offered a contrast to, forecasts by major refiners in China (e.g. Sinopec) who went in the opposite direction, and suggested their country’s oil consumption may peak by 2027.

Of course, while China currently consumes over three times as much oil as India, producers chasing market growth will inexorably head in the direction of the latter. This is as unsubtle a shift as any for a market that has looked to China for direction for over a decade.

Delhi looks to diversify its pool of suppliers

Cognisant of the cost permutations of a cyclical commodity that trades in US dollars, Indian importers are becoming as deft at hedging strategies as any other major oil importer. But India’s market clout and the world’s desire to business with Delhi, has seen it diversify its pool of crude oil suppliers at a phenomenal pace.

In 2024, the tally of suppliers rose from 27 countries to 39 countries. Further updates are to be expected at the upcoming India Energy Week 2025 – a showcase of investment opportunities in the country’s multifaceted energy sector.

India's Minister for Petroleum and Natural Gas H.E. Hardeep Singh Puri appears spoilt for choice and wants his country to remain agile in terms of sourcing crude oil globally at competitive prices.

“We know 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 of crude in the world,” H.E. Puri said in September at Gastech 2024 in Houston.

Indeed, market conditions coupled with India’s buying strategy has seen it source crude oil from Malaysia to Brazil and others in between without much difficulty.

With the tightening of US sanctions on Russian oil imports in January, and a return of President Donald Trump to the White House, Delhi’s attention has rapidly shifted to securing the barrels it needs from elsewhere including Brazil, Guyana, Oman and the US.

We should expect a similar sort of a source shifting agility over the coming years. That’s because by 2030, India's economy is expected to be the world’s third-largest, behind only the US and China. It seems the global oil market’s big new beacon of hope in 2025 will likely be just as big, if not bigger, as the turn of this decade approaches.