Updated February 7th, 2024 at 17:10 IST

India is poised to overtake China in oil demand by 2027: IEA

Presently, China leads the world in driving oil demand, with India following closely in second place in terms of growth.

Reported by: Business Desk
Indian Oil | Image:Indian Oil
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Rising oil demand of India: India is poised to overtake China as the principal catalyst for global oil demand by 2027, the International Energy Agency said on Wednesday. The agency's latest report, "Indian Oil Market Outlook to 2030," disclosed during the India Energy Week, underscored the surging oil requirements fueled by India's robust economic growth and burgeoning transportation and industrial sectors. 

Despite escalating efforts globally toward clean energy and electrification, the IEA anticipates India's oil demand to surge from 5.48 million barrels per day in 2023 to an impressive 6.64 million barrels per day by 2030.

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Presently, China leads the world in driving oil demand, with India following closely in second place in terms of growth. However, the IEA projects a pivotal moment in 2027 when India is expected to outpace China in oil demand growth, marking a turning point in global energy dynamics. The report highlights India's pivotal role as the primary source of growth in a landscape where oil demand is slowing in developed nations and China.

India, currently the world's third-largest consumer of oil after the United States and China, relies heavily on oil imports, which constitute 85 per cent of its total needs. This dependence is anticipated to rise, given the diminishing prospects of domestic oil production. Diesel, constituting 50% of India's gains and 20% of global demand growth by 2030, emerges as a key driver.

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The report acknowledges the global push for electric vehicles (EVs) but suggests a limited impact on oil demand growth, as EVs are expected to capture only a fraction of the automotive market. Notwithstanding, refinery expansions are poised to meet domestic demands and uphold India's stature as a pivotal exporter of transportation fuel.

Challenges are noted in achieving increased ethanol blending in petrol, with feedstock constraints posing hurdles to the targeted rise from 12 per cent to 20 per cent. Anticipating a decline in domestic oil production to 540,000 barrels per day by 2030 due to a lack of major discoveries, the report foresees an uptick in imports, reaching 5.8 million barrels per day.

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The IEA underscores India's strategic position, holding oil stocks sufficient for 66 days of requirements, with 7 days stored in underground strategic reserves. The report emphasizes India's imminent role as a key driver of global oil demand growth, contributing over a third of the projected 3.2 million barrels per day global gains, reaching 6.6 million barrels per day by 2030. Despite this, it's noteworthy that in absolute terms, India's oil demand will still trail behind China's even in 2030.

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Published February 7th, 2024 at 16:59 IST