News Brief
Vansh Gupta
Dec 29, 2024, 06:26 PM | Updated 06:25 PM IST
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India is closing 2024 with its oil demand growth rate outpacing that of neighbouring China, marking a significant shift in the global energy landscape.
According to S&P Global Commodity Insights, this trend is expected to extend into 2025, cementing India’s position as one of the fastest-growing fuel consumption markets.
The surge in fuel consumption has pushed Indian refiners to expedite expansion plans and diversify crude sourcing.
"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.
S&P Global data reveals India’s oil demand grew by 180,000 barrels per day (3.2 per cent year-on-year) in the first 10 months of 2024, surpassing China’s growth of 148,000 barrels per day (0.9 per cent year-on-year).
Looking ahead to 2025, India's oil demand growth is projected at 3.2 per cent, nearly double China’s 1.7 per cent.
India is expected to witness significant growth in refining capacity in 2025.
Policymakers and refiners are ramping up efforts to reduce reliance on a few oil suppliers by expanding crude import sources.
"Recent diplomatic visits will help bring in crude oil from Africa and Latin America, but the growth in absolute volume would depend on the overall crude market," said Abhishek Ranjan, South Asia oil research lead at S&P Global Commodity Insights.
India currently imports over 80 per cent of its crude oil, sourcing from the Middle East, Africa, Latin America, North America, and Southeast Asia.
Recent upstream reforms aim to boost domestic production and attract foreign investment.
These include broadening the exploration scope beyond petroleum and natural gas to shale oil, shale gas, and coal bed methane.
Earlier this month, the Rajya Sabha passed a Bill amending the Oil Fields (Regulation and Development) Act of 1948, expanding its scope to include shale oil, shale gas and coal bed methane, in addition to oil and gas.
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Vansh Gupta is an Editorial Associate at Swarajya.