NEW DELHI: The year 2024 is going to end with a higher oil demand growth rate as compared to China’s. This will position the South Asian country as one of the fastest-growing consumption centres in the global oil market, according to a report by S&P Global Commodity Insights.
This shift is expected to continue into 2025, prompting India’s refiners to accelerate expansion efforts and broaden their crude diversification strategies to keep pace with the surge in demand.
Despite China’s slower demand growth, its market size—more than three times larger than India’s—will continue to contribute significantly to global oil demand by volume. However, oil market stakeholders are increasingly turning their focus to India, as its peak demand is expected to occur much later than China’s.
“India will be the leading driver, along with Southeast Asia and other parts of South Asia, of the region’s future oil demand growth,” said Kang Wu, global head of macro and oil demand research at S&P Global Commodity Insights.
He added that in 2025 India is forecast to deliver a relatively faster growth in oil demand of 3.2% as against China’s 1.7%. He emphasised the role of petrochemical feedstock requirements in oil consumption growth in both countries next year. In the first ten months of 2024, India’s oil demand rose by 180,000 barrels per day (b/d), or 3.2% year-over-year, significantly outpacing China, which saw a rise of 148,000 b/d, or 0.9%, according to data from S&P Global Commodity Insights. As the global oil market adapts to these shifting dynamics, all eyes will remain on India as it takes centre stage in driving future growth in global oil demand.
India is also set to see significant refining capacity growth in 2025. The country is just months away from launching its first greenfield integrated refinery complex in nearly a decade, leading to active negotiations with global oil producers for term crude imports for a project with the potential to generate incremental annual feedstock demand of up to 9 million metric tons.
HPCL Rajasthan Refinery Ltd., an integrated refinery and petrochemical complex under construction in Pachpadra, Balotra district of Rajasthan, has already seen certain units enter the pre-commissioning stage. The refinery is designed to process over 83% imported medium-grade crude, with the remainder being domestic crude.