India is set to overtake China as the single biggest driver of global oil demand growth by 2030, Oilprice reported on Wednesday, citing analysts and forecasters.
India’s economy has seen “robust” growth over the past year, while China’s “has spluttered,” according to the outlet. India’s high GDP growth, as well as its increasing industrialization and urbanization, are among the factors Oilprice expects to propel the country to being the largest global driver of incremental oil demand.
India was one of the fastest-growing major economies in the financial year 2022/2023, with GDP growth of 7.2%, according to the World Bank, which forecasts India’s growth at 6.3% for the next year. China, meanwhile, is projected to have grown by 5.2% in 2023, while the forecast for 2024 is for a more sluggish 4.5%, according to the World Bank.
Being the world’s third-largest crude oil importer and consumer, India does not shy away from buying crude from whomever offers the lowest price, Oilprice writes. Since 2022, New Delhi has become a top buyer of Russian crude, taking advantage of the discounts following a ban on Russian grades in the West.
“If there’s a 30% discount, the Russians are putting a ribbon around it and sending it to us free. That’s what it means,” India's petroleum minister, Hardeep Singh Puri, told CNBC last year.
In 2023, India’s oil consumption hit a record high of 231 million tons, up from 219 million tons in 2022, according to Reuters, which cited data from the Indian Ministry of Petroleum and Natural Gas.
The Asian nation has also been boosting its refining capacity, which is expected to increase by 22% in the next five years, Oilprice noted. The government aims to expand domestic refining capacities to a level that will be able to meet the country’s fuel demand in the long term.
India imports about 85% of its crude oil needs. According to S&P Global, it sources crude mainly from the Middle East and Russia.
Some analysts estimate India’s economic growth will average around 6.3% annually until 2030, mainly driven by investment and consumer spending. Stronger economic growth would entail higher demand for oil.
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