INDIA TO LEAD GLOBAL OIL DEMAND: IEA REPORT from Vajirao & Reddy Institute

INDIA TO LEAD GLOBAL OIL DEMAND: IEA REPORT

• The International Energy Agency (IEA), in its latest report "Oil 2025" released on June 17, 2025, projected that India, currently the world's 3rd-largest oil consumer and importer, will lead global oil demand growth by a significant margin.
• India is expected to add 1 million barrels per day (bpd) to global demand by 2030, driven by its stellar economic expansion.

• Global Demand Growth: Expected to grow by 2.5 million bpd by 2030.
• Plateauing Demand: Global oil demand is forecast to reach a plateau near  105.5 million bpd by 2030.
• Supply Outlook: The world is expected to remain well-supplied through the end of the decade, barring major disruptions.
• Risks to Outlook: Rising geopolitical risks in the Middle East and unresolved trade tensions could cast a shadow over the projections.
• EV Impact: Electric vehicles are projected to displace 5.4 million bpd of oil demand globally by 2030. Electric car sales reached a record 17 million in 2024 and are expected to surpass 20 million in 2025.

• Leading Growth: India will contribute a steep 1 million bpd to global oil demand growth by 2030, more than any other country.
• Current Demand: Forecast to rise from 5.64 million bpd in 2024 to 6.66 million bpd in 2030.
• Economic Driver: This growth is primarily fueled by India's "stellar GDP expansion," projected at an average annual rate of 2.8% over the forecast period.
• Fastest Growing Major Economy: India will remain the world's fastest-growing major economy in 2025 for a fourth year running.
• Economic Size: Projected to overtake Japan as the world's fourth-largest economy in 2025.
• Import Dependence: India meets over 95% of its oil needs through imports, as domestic production is declining.

• Transport Fuels (A Global Anomaly):
  • Unlike other regions where EV adoption is curbing transport fuel demand, India's transport fuels will lead the gains.
  • Jet Fuel/Kerosene: Expected to rise fastest, at almost 6% annually. Benefits from population growth (5% between 2025-2030) and a rapidly expanding middle class keen on travel.
  • Gasoline (Petrol): Annual demand growth of 4%, with significant scope for expansion due to low levels of car ownership. Projections assume a 40% increase in the car fleet by 2030.
  • EV Impact: The expansion rate of the car fleet comfortably outstrips the impact of efficiencies and EVs, with EV growth mainly in two- and three-wheelers.
• Industrial-Linked Products:
  • Demand will marginally lag transport fuels, with annual increases in:
    • Gasoil (Diesel): 3.3% annually, contributing an aggregate gain of 380,000 bpd over the forecast period. Buoyed by urbanization, industrialization, and infrastructure development. Diesel currently accounts for one-third of India's total oil use.
    • Naphtha: 2.0% annually, driven by expansion in petrochemical feedstocks and new projects.
    • LPG/Ethane: 2.5%
• Clean Cooking Initiatives:
  • Widespread adoption of clean cooking methods (LPG) acts as an additional boost to LPG demand.
  • Pradhan Mantri Ujjwala Yojana (PMUY): Government subsidy programs like PMUY (launched 2016 to provide LPG connections to rural households) have been instrumental in this respect, replacing traditional cooking methods.

• Debt-Fueled Consumption: The IEA cautions that India's consumption boom, particularly for transport fuels, is "to a large extent debt-fueled."
• Rising Household Debt: Household debt rose to 43% of GDP in 2024, up from 35% in 2022.
• Credit Spiral: A possible credit spiral could derail the projected expansion, posing a risk to the outlook.

• Global Production Capacity: Forecast to rise by more than 5 million bpd to 114.7 million bpd by 2030.
• Indian Crude Oil Production: Expected to decline marginally by 30,000 bpd to 670,000 bpd by 2030.
• Refining Capacity by 2030:
  • China: Largest refiner at 19.5 million bpd (with nearly 2.2 million bpd excess capacity).
  • United States: 17.7 million bpd.
  • Russia: 7.1 million bpd.
  • India: 6.8 million bpd.