By 2030, oil consumption in India will grow, it will account for a third of global demand growth
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Oil consumption in India will grow faster than anywhere else until 2030, and the country will account for a third of the global increase in demand for this energy resource, the International Energy Agency (IEA) says in a country profile. Demand in India is supported by an increase in oil refining capacity and exports of petroleum products. Local production will continue to decline, experts expect. Russian supplies to the country over the past two years have grown to 40% of its total oil imports – this was facilitated by the discount on Russian oil that arose after the introduction of the European embargo.
India’s role in the global oil market will only grow – the country will provide the highest growth in demand for this energy resource until 2030 against the backdrop of high economic growth and an increasing population, the IEA country forecast says. Total oil demand in India could grow by 1.2 million b/d (to 6.6 million b/d) by 2030, a third of the total global increase (3.3 million b/d). Against this background, according to the agency’s expectations, demand growth in developed countries and China, on the contrary, will slow down.
India is already the second largest net importer of oil and the sixth largest exporter of petroleum products. Last year, imports averaged 4.6 million bpd. Only China imported more – 10.6 million b/d; in third place, with a large lag, is South Korea, 2.8 million b/d. The share of Russian supplies to India increased from 3% in 2021 to 38% in 2023, and their volume increased to 1.7 million bpd (this is 36% of Russian oil exports). The share of imports from the Middle East fell from 61% to 45% (the reduction did not affect supplies from Saudi Arabia), from West Africa – from 12% to 4.5%, South America – from 4.5% to 3% . Exports of petroleum products from the Russian Federation to India also increased – to 130 thousand bpd (that is, almost double), but the Indian market still accounts for only 5% of supplies. Indian supplies of petroleum products to Europe increased from 205 thousand to 315 thousand bpd – this effect is explained by the departure of Russian suppliers from the European market after the European embargo came into force.
In the medium term, India will continue to play a significant role in global trade in oil and petroleum products, the IEA predicts. In general, imports of oil and petroleum products from Asian countries will increase by 4.8 million b/d by 2028 to 28 million b/d (India will account for a fifth, the main share will go to China). Demand for crude oil from the Indian oil refining sector will increase by 1.05 million bpd by 2030 to 6.2 million bpd. Local oil production is expected to only decline, which will also contribute to the growth of imports.
In December, according to the Russian Institute of Energy and Finance, India imported 20.5 million tons of oil (minus 5.1% year-on-year), with the key suppliers being the trading structures of oil companies from Russia and the Middle East (Rosneft, SOMO, ARAMCO, Litasco, ADNOC) – the latter are pushing independent traders from Dubai out of the Indian market. Russia accounted for approximately a third of supplies: in December 2023, their volume increased by 1.1% compared to November, to 7.4 million tons.
Russian exports to India have not yet been affected by US sanctions, Yemeni Houthi attacks on tankers in the Red Sea and problems with transportation of the Sokol grade, the institute notes (oil of this grade is supplied from Sakhalin – its supplies fell from 575 thousand tons in October to 280 thousand. tons in December amid increased US control over the use of tankers to transport Russian oil and problems with payment for supplies). The price for Urals in December 2023 was $77.7 per barrel, and the discount to Arab Light decreased to $5.2 per barrel, being the lowest since March 2022, according to a review by analysts from the institute.
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