New Delhi: India’s oil demand will increase by 1 million barrels per day (mb/d) over the forecast period through 2030, more than any other country, driven by continued economic expansion and strong consumption of transport and industrial fuels, the International Energy Agency (IEA) said in its Oil 2025 report.
The agency said India’s GDP is projected to grow at an average annual rate of 2.8 per cent in oil-equivalent terms. “India will remain the world’s fastest growing major economy in 2025 for a fourth year running and is projected to overtake Japan as the world’s fourth largest economy this year,” the IEA stated.
“India’s oil demand will increase by a steep 1 mb/d over the forecast period – more than any other country – in the wake of stellar GDP expansion,” it said.
According to the report, transport fuels will lead the gains in India’s oil demand, a trend that contrasts with global patterns where industrial use dominates. Jet/kerosene demand in India is expected to rise at an annual rate of almost 6 per cent. The report attributes this to population growth of 5 per cent between 2025 and 2030 and an expanding middle class that is increasingly spending on foreign travel and luxury services.
Gasoline demand is projected to grow at an annual rate of 4 per cent. “Our models assume a 40 per cent increase in the size of the car fleet by 2030 – a rate of expansion that comfortably outstrips the impact of efficiencies and EVs,” the IEA said. It noted that electric vehicle growth in India will be concentrated in two- and three-wheelers, while four-wheeler penetration remains low.
The IEA flagged a potential risk to its demand outlook, noting that a significant portion of India’s consumption boom is debt-fuelled. “Household debt rose to 43 per cent of GDP in 2024, up from 35 per cent in 2022, and a possible credit spiral could derail expansion,” it said.
Industrial fuels are also expected to register strong growth. Gasoil, which accounts for nearly one-third of India’s oil use, is projected to grow by 380,000 barrels per day over the forecast period, with an annual growth rate of 3.3 per cent. Growth drivers include urbanisation, industrialisation, and infrastructure development.
Naphtha and LPG/ethane demand are projected to grow at annual rates of 2.0 per cent and 2.5 per cent, respectively. The expansion in petrochemical feedstock demand is linked to new project commissioning. The report also noted that LPG demand is being supported by clean cooking initiatives.
“Government subsidy programmes have been instrumental in this respect, in particular the Pradhan Mantri Ujjwala Yojana scheme launched in 2016 that aims to provide LPG connections across the country, replacing traditional cooking methods,” the IEA said.
The agency said India’s oil demand profile will continue to diverge from trends in advanced economies, with both retail and industrial fuel use rising through the end of the decade.>
