India to overtake China as oil demand growth centre in 2027: IEA | India Business News

Feb 7, 2024

New Delhi: International Energy Agency (IEA) predicted on Wednesday that India will overtake China as the biggest driver of global demand for oil By 2027. Despite significant efforts toward clean energy and electrification, the world's fastest growing major economy will see growth driven by transportation and industrial consumption.
During India Energy Week, the Paris-based agency released a special report titled “Indian Oil Market Outlook to 2030”. According to the report, India's oil demand is projected to increase from 5.48 million barrels per day in 2023 to 6.64 million bpd in 2030.
Currently, China holds the title of the largest driver of oil demand, while India ranks second in growth. IEA said India's growth will overtake China's in 2027.
“India's oil demand will grow at a rapid pace by 2030 despite accelerating green energy steps,” said Keisuke Sadamori, the IEA's director of energy markets and security.
India, being the third largest consumer of oil globally, imports 85% of its oil needs. Despite efforts to transition to clean energy sources, India's domestic production is expected to decline, leading to increased dependence on imports.
Diesel, which accounts for about 50% of Indian profits, will play a key role in global demand growth by 2030. The IEA estimates that the adoption of electric vehicles (EVs) will mainly be in two-wheelers and three-wheelers, with only 5%. Penetration into four wheeler sector.
The report suggests that more than 500,000 barrels of oil demand per day could be avoided due to increased EV penetration, energy efficiency improvements and biofuels growth, of which about 200,000 bpd is attributable to EVs.
The refinery expansion is expected to meet domestic needs and maintain India's position as a major exporter of transportation fuels. India's energy companies are targeting an additional 1 million barrels per day of refinery capacity.
Recognizing India's role in global energy demand growth, the IEA highlighted challenges including shortage of feedstock for blending ethanol into petrol and a potential decline in domestic crude oil production.
Finally, the IEA emphasized that India's transformation into the largest source of global oil demand growth by 2030 is integral to the country's economic growth, presenting both opportunities and challenges for its energy security.

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