India Will Be Largest Source For Global Oil Demand Growth Till 2030: IEA

India’s role in global oil markets is expected to expand substantially over the remainder of the decade, fuelled by strong growth in its economy, population, and demographics, according to the International Energy Agency.

The country is projected to be the single largest source of global demand growth from 2023 to 2030, surpassing the growth rates in developed economies as well as China, according to the Indian Oil Market - Outlook to 2030 report that was released on Tuesday.

India's oil demand is projected to grow almost 1.2 million barrels per day over 2023–2030, accounting for more than one-third of the projected 3.2 mbpd global gains.

The IEA forecasted that the growth in developed countries and China would initially slow down and then reverse during the period. Factors like urbanisation, industrialisation, emergence of a wealthier middle class keen for mobility and tourism, as well as efforts to achieve greater access to clean cooking will underpin the expansion in oil demand for India.

The massive industrial expansion will lead to diesel or gasoline being the single largest source of India's oil demand growth. Diesel or gasoline demand would account for almost half of the projected demand uptick and more than one-sixth of total global demand growth through 2030, according to the IEA.

Demand for jet fuel and kerosene is expected to grow at an average of 5.9% per year, while gasoline demand is projected to grow 0.7% on average, the report said.

The demand growth is expected to be diversified across various categories, with a focus on sectors like road transport, clean cooking initiatives that will boost the demand for liquified petroleum gas, and the petrochemical sector.

The road transport sector is expected to drive growth based on factors like increased vehicle ownership, infrastructure development and rising mobility needs, according to the report.

The petrochemical sector's growth in India is significantly smaller than the global average; the increase in investments in production facilities is expected to drive demand.

The report also highlighted the heavy investments made by the Indian oil companies in the refining sector in order to meet the rise in domestic oil demand.

Over the next seven years, 1 mbpd of new refinery distillation capacity will be added. The addition marks a growth rate of capacity addition greater than any other country in the world outside of China, the IEA said.