India is also likely to deliver a relatively faster oil demand growth of 3.2 per cent compared with China's 1.7 per cent in 2025
India is set to become one of the fastest-growing oil consumption centres, with oil demand growth rate surpassing that of China's by the end of this year, revealed a new study by S&P Global Commodity Insights. This trend is likely to continue in 2025 as well, as major oil refiners in India accelerate their expansion plans and work towards crude diversification.
"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.
India would deliver a relatively faster oil demand growth of 3.2 per cent compared with China's 1.7 per cent in 2025, said Wu while emphasising on the impact of growing petrochemical consumption on oil demand in both countries.
Despite the lower demand growth rate, China’s oil market is still over three times larger than that of India, and is expected to contribute largely in terms of overall volume. Global oil suppliers are increasingly shifting their focus to India amid expectations of peak demand, which is expected to hit later than China's.
India's refining capacity is expected to surge significantly in 2025. Negotiations are underway with international oil producers to set up the country's first greenfield integrated refinery complex in a decade, which might result in an additional yearly feedstock demand of up to 9 million metric tonnes.
Almost 85 per cent of India’s oil demand is met through imports. Considering the growing demand, India has been exploring markets beyond Russia and West Asia. Indian refiners are in fact exploring long-term crude oil import agreements with relatively new suppliers in South America. Prime Minister Narendra Modi's maiden visit to Guyana in 2024 is said to have contributed to this larger goal.
India's Russian crude imports averaged 1.7 million barrels per day between January and September this year, making the non-OPEC producer its largest supplier. The US was the fifth-largest supplier, accounting for 215,000 barrels per day in the same period, revealed S&P data.
In order to reduce excessive reliance on a handful of oil-producing nations, domestic policy has been focusing on diversifying the crude import basket of Indian refiners. This is expected to amp up India's refining capacity.