According to the latest global outlook report by the Organisation of the Petroleum Exporting Countries (OPEC), India is set to lead oil demand growth among major economies in 2025 and 2026, outpacing even China by a wide margin. The report forecasts that India’s oil demand will increase by 3.39% in 2025, rising from 5.55 million barrels per day (bpd) in 2024 to 5.74 million bpd in 2025. This growth rate is more than double China’s projected 1.5% increase for the same year. Demand is expected to further rise to 5.99 million bpd in 2026, marking a 4.28% increase.

Despite this rapid growth, the United States remains the largest consumer globally, with an estimated demand of 20.5 million bpd in 2025, followed by China at 16.90 million bpd. India ranks third in terms of absolute oil consumption, highlighting its rising energy needs amid ongoing economic expansion.

Drivers of India’s Oil Demand Growth

The report attributes India’s strong oil demand growth to several key factors:

• Robust Economic Growth: Driven by consumer spending, investments, and proactive government policies across sectors.

• Diesel Demand: Diesel remains the largest contributor to demand growth, largely due to India’s expansive road infrastructure projects which boost consumption of bitumen, a petroleum product essential for road construction.

• Transport Fuel and Manufacturing: Growth in the transport sector and manufacturing industries fuels strong demand for refined petroleum products.

• Petrochemical Feedstock: Expanding petrochemical industries require increased oil derivatives, adding to overall consumption.

The report notes that while recent US tariffs may dampen GDP growth, ongoing fiscal and monetary stimulus measures are expected to cushion any adverse effects, maintaining momentum in energy consumption.

Import Dependency and Supply Sources

India’s energy security remains a crucial consideration, as it imports over 85% of its crude oil requirements. In March 2025, crude imports hit a record 5.4 million bpd, with major suppliers including:

• Russia, accounting for 36% of crude imports

• Iraq, contributing 17%

• Saudi Arabia, providing 11%

The report also highlights a 2% month-on-month rise in petroleum product imports, particularly driven by liquefied petroleum gas (LPG). Despite a slight decline in some product imports, India’s exports of petroleum products remain strong, showcasing the country’s growing role as a regional refining hub.

Global Oil Demand Outlook

Globally, OPEC expects oil demand to grow by 1.3 million bpd annually in both 2025 and 2026, maintaining previous forecast levels. India’s outsized demand growth stands out amid more moderate increases from other major economies, underscoring the country’s expanding energy footprint.

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