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. In this Report, we look at how these wideranging changes will impact global oil markets. Our analysis is focused on the future evolution of the country’s oil sector and its increasingly dominant role in international trade, as well as demand, supply and refining developments and the government’s key objectives to reduce oil imports, transition to cleaner fuels and improve energy security.

The global energy crisis has cast energy security as a key political priority for countries across the world – and it is a critical imperative for India given it is highly dependent on oil imports to meet its supply needs. The crisis has also boosted the momentum behind clean energy transitions. For the first time, the IEA sees a peak in global oil demand in all its scenarios this decade. The pace of demand growth diverges markedly across sectors, with road transport fuels set to enter decline first in response to the rapid uptake of electric vehicles, efficiency improvements and the continued rise of biofuels.

The geographic dispersion is perhaps even more significant as countries embark on their transition paths from very different starting points. India will become the largest source of global oil demand growth between now and 2030, while growth in developed economies and China initially slows and then subsequently goes into reverse in our outlook. Urbanisation, industrialisation, the emergence of a wealthier middle-class keen for mobility and tourism, plus efforts to achieve greater access to clean cooking, will underpin the expansion in oil demand. Consequently, India is on track to post an increase of almost 1.2 mb/d, accounting for more than one-third of the projected 3.2 mb/d global gains, to reach 6.6 mb/d by 2030.

The massive industrial expansion means that diesel/gasoil is the single largest source of oil demand growth, accounting for almost half of the rise in the nation’s demand and more than one-sixth of total global oil demand growth through to 2030. Jet-kerosene demand is poised to grow strongly, at around 5.9% per year on average, but from a low base compared to other countries. Gasoline will grow by 0.7% on average, as the electrification of India’s vehicle fleet avoids a more substantial rise. LPG rounds out the growth picture, as petrochemical industry investments in production facilities boost feedstock demand. The Indian government’s world-leading progress in bringing clean cooking programmes to its rural populations have led to LPG imports surging nearly three-fold in the past decade and further initiatives will see demand growth continue through 2030.

Indian oil companies are investing heavily in the refining sector to meet the rise in domestic oil demand. Over the next seven years, 1 mb/d of new refinery distillation capacity will be added – more than any other country in the world outside of China. Several other large projects are currently under consideration that may lift capacity beyond the 6.8 mb/d capacity that we expect so far.

India is set to maintain its position as a key exporter of transportation fuels to markets in Asia and the Atlantic Basin. Continued investment in refining capacity and complexity will boost light and middle distillate production, even as the industry pivots further towards heavier and more sour crudes. India’s role as a global swing supplier has risen since 2022 as the loss of Russian product exports to European markets has increased the pull of Asian diesel and jet fuel westward. In 2023, India was the fourth-largest exporter of middle distillates globally and the sixth largest refinery product exporter at 1.2 mb/d. New refining capacity is forecast to boost product supplies to global markets to 1.4 mb/d through mid-decade before edging lower to 1.2 mb/d by 2030 given the steady rise in domestic demand.

As a relatively small oil producer, and with limited potential for near-term growth, India’s domestic production accounted for just 13% of the country’s supply needs. In 2023, domestic oil production averaged around 700 kb/d. Despite renewed efforts by the government to attract foreign upstream investment, domestic crude oil production is expected to see continued declines over the medium term. A dearth of new discoveries in recent years will contribute to Indian oil supply falling to 540 kb/d by 2030.

Notably, India’s efforts to accelerate its energy transition is set to deliver significant oil savings in the forecast period. Increased uptake in electric vehicles is set to play a key role in decarbonising the transport sector. We estimate that, combined, new EVs and energy efficiency improvements will avoid 480 kb/d of extra oil demand in the 2023-2030 period. That means without these gains India’s oil demand would reach a much higher 1.68 mb/d by 2030 compared with the current forecast.

Biofuels are also expected to play a key role in India’s decarbonisation of the transport sector. The South Asian nation is already the world’s third-largest producer and consumer of ethanol, as domestic production has tripled over the last five years. Supported by the country’s abundant feedstocks, political support and effective policy implementation, its ethanol blending rate of around 12% is amongst the world’s highest. India has advanced by five years its deadline for doubling nationwide ethanol blending in gasoline to 20% in Q4 2026. Achieving 20% ethanol blending in such a short time frame presents several challenges, not least rapidly expanding feedstock supplies.

The country’s spectacular economic growth story, however, brings myriad challenges for its security of energy supplies. India was already the world’s second-largest crude oil net importer in 2023, having boosted imports by 36% over the past decade to 4.6 mb/d to meet rising refinery intake. Increased refining processing will lift crude oil imports further, to 5.8 mb/d by 2030, with major implications for India’s security of supply.

The energy crisis and recent surge in long-haul crude sources, notably from Russia, has also added further impetus to sustaining the country’s oil resilience in case of market disruptions. Based on IEA methodology, current stock holding levels equate to 66 days of net-import cover, with SPR stocks of 26 mb equal to seven days. India needs to enhance its capacity to respond to possible oil supply disruptions by implementing and strengthening its SPR programmes and improving oil industry readiness.