- India will lead global oil demand growth until 2035, a shift that occurs as China reduces oil consumption due to EV adoption.
India is set to lead global oil demand growth until 2035, according to a recent report by the International Energy Agency (IEA).
The report highlighted that India will add nearly 2 million barrels per day (mb/d) to global oil demand during this period, making it the primary growth driver of the entire industry.
It said “India becomes the main source of oil demand growth, adding almost 2 million barrels per day (mb/d) to 2035”.
This shift comes as China, which has historically been the engine of oil market growth, transitions towards electricity-driven energy usage.
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The report noted that China’s oil consumption for road transport is projected to decline due to the rise of electric vehicles. However, this decline is partially offset by increased oil usage in petrochemical production.
Globally, the growth in oil demand is slowing down under the Stated Policies Scenario (STEPS), which is causing significant challenges for major oil-producing nations. These resource owners may face an oversupply situation as spare crude oil production capacity is expected to rise to 8 mb/d by 2030.
The IEA also warned of potential near-term disruptions to oil and gas supplies due to geopolitical tensions in the Middle East.
It stated that approximately 20 per cent of the world’s oil and liquefied natural gas (LNG) supplies currently pass through the Strait of Hormuz, a critical maritime chokepoint in the region.
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Despite these risks, the report suggested that easing market balances and declining oil demand growth could stabilize prices in the long run.
Additionally, a significant transformation is underway in the transport sector. The report stated that over the past decade, road transport has driven oil demand growth by 4.2 mb/d, contributing to nearly half of global oil demand growth.
However, this trend is reversing, with oil demand for passenger cars expected to decline by 1 mb/d by 2030. This change is a major factor behind the anticipated peak in global oil demand by the end of this decade under the STEPS.
Looking ahead, new LNG projects are expected to increase global export capacity by almost 50 per cent by 2030, further reshaping the global energy landscape. As countries adapt to these shifts, as per report India’s growing energy needs will play a central role in shaping global oil markets.
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First Published Date: 28 Dec 2024, 09:59 AM IST
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