According to a recent report by the International Energy Agency (IEA), India is expected to lead global oil demand growth until 2035. The report highlighted that India will add nearly 2 million barrels per day to global oil demand during this period, making it the primary growth driver of the entire industry. This shift is occurring as China, which has traditionally been the main engine of oil market growth, transitions towards electricity-driven energy usage. The report noted that China’s oil consumption for road transport is projected to decline due to the rise of electric vehicles, but 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), leading to significant challenges for major oil-producing nations. The IEA warned of potential near-term disruptions to oil and gas supplies due to geopolitical tensions in the Middle East, with about 20 per cent of the world’s oil and liquefied natural gas supplies passing through the critical maritime chokepoint of the Strait of Hormuz. However, the report suggested that easing market balances and declining oil demand growth could stabilize prices in the long run.
A significant transformation is also underway in the transport sector, with road transport having driven oil demand growth by 4.2 mb/d over the past decade, 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 the decade under the STEPS. The report also highlighted that 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, India’s growing energy needs are expected to play a central role in shaping global oil markets. With India becoming the main source of oil demand growth in the coming years, major oil-producing nations will need to adjust to this new reality. The report by the IEA emphasizes the importance of recognizing these changing dynamics and the need for strategic planning to meet the evolving energy demands of the future. Despite the potential challenges and disruptions in the oil and gas industry, there are opportunities for stabilization and growth as countries navigate this period of transition.
In conclusion, India’s rise as a key player in global oil demand growth highlights the shifting dynamics of the energy market. With the country expected to significantly contribute to the increase in oil demand until 2035, major oil-producing nations will need to recalibrate their strategies to align with this new reality. The report by the IEA underscores the need for proactive measures to address potential disruptions and uncertainties in the industry, while also recognizing the opportunities for stabilization and growth amidst these changes. As the global energy landscape continues to evolve, India’s energy needs and consumption patterns will continue to shape the future of the oil market.
