Summary
India is projected to surpass China in oil demand growth by 2025, signaling a major shift in global energy consumption patterns. According to the Organization of the Petroleum Exporting Countries (OPEC), India’s oil consumption is expected to increase from 5.55 million barrels per day (bpd) in 2024 to 5.74 million bpd in 2025, outpacing China’s slower growth rate during the same period. This trend reflects India’s rapid economic expansion, youthful demographic profile, and rising transportation and residential fuel needs, positioning the country as a key driver of future global oil demand.
Historically, China has dominated oil demand growth since the late 1990s, but its consumption growth has moderated due to structural economic changes, demographic headwinds, and the increasing adoption of electric vehicles and liquefied natural gas (LNG). Although China’s total oil consumption remains significantly higher than India’s—approximately three times greater—the accelerating pace of India’s oil demand underscores its emerging influence in global energy markets.
India’s growing dependence on crude oil imports, exceeding 85% of its requirements, and record import volumes have heightened its strategic importance in global oil trade. The shift in demand growth carries substantial economic and geopolitical implications, affecting global supply chains, oil pricing, and investment patterns amid broader uncertainties, including geopolitical tensions and policy shifts.
This transition in oil demand leadership highlights the evolving landscape of global energy consumption, where emerging economies like India are increasingly shaping future demand trajectories, even as traditional growth centers such as China experience slower expansion.
Background
India’s oil demand growth is emerging as a significant driver in the global energy landscape, poised to outpace China by 2025. Historically, China has dominated oil consumption growth, surpassing India almost every year from 1998 to 2023. However, recent trends indicate a shift, with India expected to lead global oil consumption increases in 2024 and 2025. This change is underpinned by India’s rapidly expanding economy and demographic advantages. For instance, India’s GDP growth rate for fiscal year 2023-2024 was revised upward to an impressive 9.2%, the highest in over a decade. Additionally, India’s median age is notably younger at 29.5 years compared to 39.8 in China and 49.5 in Japan, contributing to a more dynamic and growing workforce driving energy demand.
The country’s petroleum consumption has been steadily rising, fueled by expanding transportation fuel needs and residential energy consumption such as for cooking. Forecasts project India’s oil consumption to reach 5.74 million barrels per day (bpd) in 2025 and further increase to 5.99 million bpd in 2026, representing one of the fastest growth rates globally, supported by government initiatives and infrastructure expansion. Diesel remains a key driver, and Russia continues to be the top crude oil supplier for India. This surge is expected to command analyst attention similar to the focus on China’s oil market a decade ago.
In contrast, China’s oil demand growth is moderating due to a weaker macroeconomic outlook and underperformance in key sectors such as petrochemicals and refined fuel consumption, which has pressured global oil prices and prompted downward revisions in demand forecasts by OPEC and other agencies. While China’s oil demand is still significant—about three times that of India—the shifting growth dynamics emphasize India’s rising influence in global energy markets. Overall, this background illustrates the evolving contours of global oil demand, where non-OECD countries like India play an increasingly prominent role in shaping future consumption patterns.
Factors Driving India’s Oil Demand Growth
India’s oil demand growth is being propelled by a combination of robust economic expansion, strong consumer spending, and continued government support for key sectors. The OPEC Monthly Oil Market Report highlights that India’s economy is expected to maintain steady growth fueled by vibrant manufacturing and service sectors, alongside easing inflation and fiscal stimuli that offset external challenges such as recent U.S. tariffs. This positive economic environment underpins the forecasted increase in oil consumption, particularly in diesel, which remains the primary driver of demand growth.
Economic indicators reinforce this optimistic outlook. Deloitte projects India’s GDP growth to range between 6.3% and 6.5% for fiscal years 2024 to 2025, supported by strong domestic demand reflected in rising goods and services tax collections, auto sales, and fast-moving consumer goods. Although some consumer sectors experienced stress due to inflation and uncertainty during late 2024, rural areas demonstrated more robust growth compared to urban regions, indicating a broad base of consumption.
India’s heavy reliance on imported crude oil also contributes to rising demand figures. The country imports more than 85% of its crude oil requirements, which are refined into fuels such as petrol and diesel. Crude oil imports hit a record high of 5.4 million barrels per day in March 2024, supported by expanding refinery throughput to meet growing domestic fuel needs. Petroleum product consumption, a proxy for crude oil demand, is projected to rise by 4.7% in the fiscal year 2025, driven by increased use of petrol, aviation turbine fuel (ATF), liquefied petroleum gas (LPG), diesel, and petroleum coke.
Demographic factors also play a significant role. India’s relatively young median age—around 28.8 years in 2025—combined with a favorable dependency ratio, supports strong labor force growth and increasing transportation and industrial fuel requirements. This demographic advantage, alongside ongoing urbanization and industrialization, further stimulates oil demand.
Comparison with China’s Oil Demand Growth
India is projected to outpace China in oil demand growth by 2025, marking a significant shift in global consumption patterns. Historically, China’s oil demand growth has surpassed India’s almost every year between 1998 and 2023. However, forecasts indicate that India will lead the increase in global oil consumption in both 2024 and 2025, driven by rising transportation fuel needs and residential fuel use.
In absolute terms, China still consumes significantly more oil than India, with liquid fuels consumption estimated at 16.4 million barrels per day (b/d) in 2023—more than triple India’s 5.3 million b/d. Despite this, India’s oil consumption is growing faster both in percentage and volume terms. For instance, India’s liquid fuels consumption is forecast to increase by 220,000 b/d in 2024 and accelerate to 330,000 b/d in 2025, the highest growth among all countries in the Energy Information Administration’s (EIA) short-term outlook. In contrast, China’s growth is expected to be 90,000 b/d in 2024 and 250,000 b/d in 2025.
Several factors contribute to the differing demand trajectories of the two countries. China’s oil demand growth is constrained by demographic and structural changes, including a declining population, slowing economic growth, and a rapid expansion of electric vehicle ownership which curbs transportation fuel consumption. Additionally, increased use of liquefied natural gas (LNG) for freight trucking further limits oil demand growth in China’s transportation sector. Much of China’s modest increase in oil consumption is anticipated to come from petrochemical feedstocks rather than transportation fuels.
Conversely, India’s oil demand is bolstered by its strong economic growth, demographic advantages, and lower penetration of electric vehicles. India’s GDP growth rate was revised upward to 9.2% for fiscal year 2023-2024, the highest in over a decade, underscoring robust domestic demand. The median age in India is significantly younger than in China (approximately 29.5 years versus 39.8 years), and India’s population is still growing, which supports ongoing increases in transportation fuel use. India’s transportation sector largely relies on internal combustion engines, which remain more affordable compared to electric vehicles, thereby sustaining oil demand growth.
While China’s oil consumption is expected to peak before the end of the decade and then gradually decline, India’s oil demand is projected to continue increasing throughout the 2030s, potentially altering the global oil consumption landscape in the long term. Despite these shifts, the United States is anticipated to remain the largest oil consumer, followed by China and then India.
OPEC Report Findings
The Organization of the Petroleum Exporting Countries (OPEC) has highlighted a significant shift in global oil demand dynamics, projecting India to outpace China in oil demand growth by 2025. According to the latest OPEC global outlook, India’s oil consumption is expected to rise from 5.55 million barrels per day (bpd) in 2024 to 5.74 million bpd in 2025, representing a growth rate of 3.39%. This upward trend is anticipated to continue into 2026, with demand reaching 5.99 million bpd, marking a 4.28% year-on-year increase. In comparison, China’s oil demand growth is forecast at a much slower pace of 1.5% in 2025 and 1.25% in 2026.
The robust growth in India’s oil demand is attributed to strong economic expansion, supported by vigorous manufacturing and service sector activities, along with ongoing government support in key sectors amid easing inflation. These factors are driving higher consumption of transportation fuels and other petroleum products. India’s reliance on imports remains significant, with crude imports hitting a record 5.4 million bpd in March 2024, following a month-on-month increase exceeding 5%.
The United States is projected to remain the world’s largest oil consumer, with demand estimated at 20.5 million bpd in 2025, followed by China at 16.9 million bpd and 17.12 million bpd in 2026. India is expected to hold the third position globally, with a notably faster growth trajectory than China.
OPEC’s revised outlook comes amid a series of downward adjustments to global oil demand growth forecasts, influenced by weaker-than-expected demand in key markets, including China. The group reported a reduced global demand growth estimate of 1.61 million bpd for 2024, down from earlier projections of 1.82 million bpd, underscoring the challenges faced by oil producers in balancing supply with fluctuating demand. Despite these challenges, India is set to account for approximately 25% of global oil demand growth in 2024 and 2025, according to the U.S. Energy Information Administration (EIA), further cementing its role as a key driver of future oil consumption growth.
This shifting landscape underscores the increasing importance of India in global energy markets and highlights the evolving nature of oil demand growth, with developing economies taking a leading role while traditional growth engines like China experience slower expansions.
Economic and Geopolitical Implications
The shift in oil demand growth from China to India by 2025 carries significant economic and geopolitical ramifications. India’s expanding oil consumption reflects its robust economic growth, driven primarily by strong manufacturing and service sector activities supported by sustained government policies. This growth trajectory is expected to result in an increase of approximately 246,000 barrels per day (bpd) in oil demand in 2025, bringing India’s total consumption to around 6.0 million bpd. In contrast, although China will continue to consume substantially more oil overall—around triple the amount India uses—it is forecasted to have a comparatively slower growth rate in demand due to factors such as rising electric vehicle adoption, increasing use of liquefied natural gas, and demographic shifts.
Economically, India’s heavy dependence on crude oil imports—over 85% of its needs—poses both opportunities and challenges. The country set a record in crude imports at 5.4 million bpd in March 2025, highlighting its rising import requirements to sustain economic activity and energy needs. This growing reliance underscores the importance of stable global oil markets for India’s energy security and economic development. Meanwhile, the global oil market faces uncertainties stemming from geopolitical tensions, tariff implementations, and sanctions, particularly affecting supply chains linked to Russia, Iran, and Venezuela. These factors contribute to volatile oil prices, which in turn influence India’s import costs and strategic planning.
Geopolitically, India’s increasing role as a major oil consumer reshapes the energy landscape in Asia and beyond. As China’s oil demand growth moderates and India’s accelerates, the strategic importance of India as an energy market intensifies. This transition could impact global oil trade routes, investment patterns in upstream and downstream sectors, and the geopolitical dynamics involving traditional oil suppliers and consuming nations. Furthermore, OPEC’s downward revisions of global oil demand forecasts reflect the broader uncertainties in economic activity and energy policies, including the effect of tariffs and production adjustments by OPEC+ members. These developments emphasize the interconnectedness of economic growth, energy demand, and geopolitical strategies.
Future Outlook
India is poised to surpass China in oil demand growth by 2025, marking a significant shift in global energy consumption patterns. Forecasts indicate that India’s oil demand will increase substantially, driven primarily by rising transportation fuel needs and household energy consumption, such as fuels for home cooking. According to the U.S. Energy Information Administration (EIA), India’s liquid fuels consumption is projected to grow by 330,000 barrels per day (bpd) in 2025, up from 220,000 bpd in 2024, representing the highest growth among all countries in their short-term energy outlook. This growth is expected to continue beyond 2025, with India adding 8 million bpd to its oil demand by 2050.
In contrast, China’s oil demand growth is forecast to be more moderate. While China’s consumption will still increase by 250,000 bpd in 2025, it will lag behind India’s expansion in both percentage and volume terms. China’s overall oil demand remains significantly higher—approximately three times India’s current consumption—yet its rapid deployment of electric vehicles is expected to curb further growth in liquid fuel demand. Consequently, India’s absolute increases in oil demand are projected to draw level with and eventually surpass China’s later this decade.
The growing importance of India, along with Other Asia, Africa, and the Middle East, is underscored by projections that combined oil demand in these regions will rise by 22 million bpd between 2023 and 2050. This surge highlights the shifting epicenter of incremental demand towards emerging economies with expanding infrastructure, industrialization, and increasing urbanization. India’s expanding automotive industry, construction, and real estate sectors, supported by substantial government investments and reforms, contribute significantly to this upward demand trajectory.
Despite the optimistic growth outlook, challenges remain. Rising costs of human resources and the need for substantial additional manpower to meet the growing oil market demand could impact company profitability. Moreover, demand uncertainty persists, influenced by policy developments and technological advancements, which could affect the pace and scale of growth in oil consumption. OPEC scenarios suggest that policy shifts could introduce demand variability of 5 to 10 million bpd up to 2025.
By 2026, India’s oil demand is expected to reach approximately 5.99 million bpd, representing a year-on-year increase of 4.28%, compared to China’s more modest growth rates of 1.5% in 2025 and 1.25% in 2026. Globally, oil demand is forecast to increase by about 1.3 million bpd annually during this period, with the United States maintaining its position as the largest consumer, followed by China and India.
The content is provided by Avery Redwood, Fact-Nest
