The rise of India as a major source of growth in global crude oil consumption is a significant development that has been highlighted by the US Energy Information Administration (EIA). The country’s increasing demand for transport fuels and fuels for home cooking, driven by a growing economy, is expected to propel India past China as the main source of growth in the current calendar year and the next.
According to the US EIA’s projections, India is set to account for 25% of the total oil consumption growth globally in 2024 and 2025. This growth surpasses that of China, which has been a dominant force in global oil consumption for many years. While China’s consumption is expected to grow as well, India’s growth in both percentage and volume terms will exceed China’s in the forecast period.
The US EIA forecasts an increase of 0.9 million barrels per day (mb/d) in global consumption of liquid fuels in 2024, with even more growth expected in 2025. India’s consumption of liquid fuels is expected to increase by 220,000 b/d in 2024 and by 330,000 b/d in 2025, the highest among all countries in the US EIA’s forecast.
On the other hand, China’s liquid fuels consumption is projected to grow by 90,000 b/d in 2024 and by 250,000 b/d in 2025. Factors such as 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 in China. However, most of China’s growth in oil consumption is attributed to increasing use for manufacturing petrochemicals.
While India’s growth is significant, China still consumes significantly more oil overall. In 2023, India’s total consumption of liquid fuels was 5.3 mb/d, whereas China consumed more than triple that amount at 16.4 mb/d, based on estimates in the US EIA’s December Short-Term Energy Outlook.
The shift in global oil consumption dynamics towards India underscores the country’s increasing importance in the energy market and its growing influence on global demand for crude oil. As India continues to expand its economy and diversify its energy sources, its role in shaping the future of the global energy landscape is likely to become even more pronounced.
