India, the world's third largest oil importing and consuming nation, will be the new epicentre of oil demand growth over the next decade, the International Energy Agency (IEA) said on Wednesday. Among emerging markets and developing economies, energy demand in India grows the fastest, increasing by 3 per cent each year on an average through 2035.
In its latest Global Energy Outlook, the Paris-based agency said India will account for the largest increase in global oil consumption through 2035, driven by rapid economic expansion, industrialisation and rising vehicle ownership. The country's growing appetite for energy will outpace that of China and Southeast Asia combined, underscoring its crucial role in shaping global oil markets.
"Oil remains the dominant fuel to 2050 in the CPS (current policies scenario). China accounted for more than 75 per cent of oil demand growth over the past 10 years, but this picture is changing, and India becomes the new epicentre of growth in oil demand," IEA said.
"India leads global oil demand growth over the next 10 years with almost half of the additional barrels produced globally to 2035 heading in its direction," it said. India’s oil use increases from 5.5 million barrels per day (mbpd) in 2024 to 8 mbpd in 2035 as a result of rapid growth in car ownership, increasing demand for plastics, chemicals and aviation, and a rise in the use of liquefied petroleum gas (LPG) for cooking.
"Oil demand in India increases by 2 mbpd to 2035 - the largest increase in any country - and continues to rise through to 2050. The next largest increases to 2035 are in Africa (1.2 mbpd) and Southeast Asia (1 mbpd)," it said.
With limited domestic production, India's dependence on imports to meet this rising demand will only increase. IEA projected that import dependency in India rises from 87 per cent in 2024 to 92 per cent in 2035 despite government efforts to promote domestic production. While India is import dependent for crude oil - the raw material that is processed in refineries and turned into fuels like petrol and diesel - it is not just self-sufficient in refining capacity but also has exportable surplus.
Around 9 mbpd of new refining capacity comes online globally between 2024 and 2035. With around 5 mbpd in closures over this period, net refining throughput increases by 4 mbpd. Asia sees a net increase of around 3 mb/d in refining capacity between 2024 and 2035, led by increases in India.
“Since 2022, India has emerged as a global swing supplier, refining volumes of Russian crude oil exports that previously flowed to Europe. India's refining capacity grows from 6 mbpd in 2024 by 1.5 mbpd to 2035, which solidifies its role as a key exporter of transport fuel," IEA said.
India's demand for natural gas, which is used to generate electricity, produce fertiliser, fuel automobiles as CNG and used in household kitchens for cooking, nearly doubles to 2035 to reach 140 billion cubic meters (bcm), led by growth in its city-gas distribution sector. Most of this will be met through imports of the fuel in its liquid form (liquefied natural gas or LNG). "In 2035, India imports 50 bcm of LNG, up from 35 bcm today," IEA said.
Also read: India’s oil demand projected to be highest in world by 2050
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