India is set to become the global leader in consumption of petroleum products, surpassing China by 2030.
Feb 1, 2024
Come 2030, India will become the largest consumer of petroleum products, using them in various purposes such as heating, lighting, cooking, transportation and petrochemicals. The country is on course to become the global leader in consumption of petroleum products, surpassing China by 2030. The growth of the middle class coupled with urbanization and industrialization are the driving factors, which have led to a huge increase in incremental oil consumption for purposes as varied as heating, lighting, cooking, transportation and petrochemicals.
As per the Ministry of Petroleum and Natural Gas, India’s petroleum consumption increased to 231 million tonnes in 2023, up from 219 million tonnes in 2022. This increase has fuelled the rapid growth of the country’s economy, which is set for a further rise. India is already the second-most important driver of incremental consumption in the world.
Oil consumption in China is expected to peak before 2030, after which it will show a downward trend. However, the story will not be the same for India, which will continue the rising trend in incremental consumption throughout the next decade.
Though petroleum products consumption took a major beating during the Covid-19 pandemic, it has mostly recovered. As per the Statistical review of world energy, Energy Institute, 2023, both India and China experienced compound annual growth in consumption of around 3.5% between 2012 and 2022, compared to just 0.5% per year in the rest of the world.
During 2010-20, China’s petroleum products consumption was almost three times more than India. The figure fell drastically after the introduction of electric vehicles, which were able to successfully meet the transportation demands of that country. On the other hand, internal combustion engines continued to play an important role in fulfilling the transportation needs of India.
India’s absolute increases will draw level and then take the lead later this decade. India’s share of global oil consumption rose to 5% in 2022, up from 4% in 2021 and 3% in 2002, above the average for the previous decade.
However, rapid growth in the first nine months of the year faded during the fourth quarter, which was one of the reasons why oil prices slumped towards the end of 2023. The impact of India on the oil market in 2022 is more of a forecast of the much bigger effect it will have by 2030.