London — India’s petroleum consumption climbed to a new record last year and the country is on course to overtake China as the primary driver of incremental oil consumption before 2030.
Urbanisation, industrialisation and the growth of the middle class are driving a rapid increase in consumption of petroleum products for heating, lighting, cooking, transportation and petrochemicals.
China’s demand for transportation is increasingly satisfied by electric vehicles, but India’s is still mostly met by internal combustion engines owing to their greater affordability.
While China’s oil consumption is expected to peak before the end of the decade and start to fall, India’s will continue increasing throughout the 2030s.
India is already the second-most important driver of incremental consumption in the world and is on course to take the top spot before 2030.
The country’s economic growth will become a primary driver of global consumption and prices and a focus for analysis and forecasts.
India’s petroleum consumption increased to 231 million tonnes in 2023, up from 219 million tonnes in 2022, according to the Ministry of Petroleum and Natural Gas.
Consumption was severely affected by the coronavirus pandemic but has mostly recovered. It was only 6 million tonnes below the pre-pandemic trend for 2015-2019 last year.
India and China both experienced compound annual growth in consumption of around 3.5% between 2012 and 2022, compared with just 0.5% per year in the rest of the world (“Statistical review of world energy, opens new tab”, Energy Institute, 2023).
China’s consumption started the 2010s almost three times larger than India’s, so similar percentage growth rates have translated into much larger absolute increases in the number of tonnes used.
As China’s rapid deployment of electric vehicles curbs further consumption growth, India’s absolute increases will draw level and then take the lead later this decade.
India’s share of global oil consumption already rose to more than 5% in 2022, up from 4% in 2021 and 3% in 2002.
By 2030, India’s crude oil imports and fuel consumption will command almost as much attention from analysts as China’s did a decade ago.
India’s petroleum consumption increased by more than 5% last year, above the average for the previous decade.
But rapid growth in the first nine months of the year faded during the fourth quarter, which is one reason why oil prices slumped towards the end of 2023.
India’s impact on the oil market last year is a foretaste of the much bigger effect it will have before the current decade is over.
*John Kemp is a Reuters market analyst. Editing: Paul Simao
