India Positioned as Global Oil Demand Growth Epicenter, IEA Forecasts Rapid Energy Expansion Through 2035

India is set to emerge as the focal point of global oil demand growth over the next decade, according to the International Energy Agency (IEA) in its latest Global Energy Outlook 2025. The report highlights that rapid economic growth, industrialization, and increasing vehicle ownership will significantly drive energy consumption in the country. By 2035, India is expected to surpass both China and Southeast Asia in terms of oil consumption, with an annual energy demand growth rate projected at 3%, the highest among emerging markets.

The IEA forecasts that India’s oil consumption will rise from 5.5 million barrels per day (mbpd) in 2024 to 8 mbpd by 2035. This surge is attributed to several factors, including a growing number of vehicles, increased demand for plastics and chemicals, a rise in aviation fuel usage, and greater reliance on liquefied petroleum gas (LPG) for cooking. Notably, nearly half of the global increase in oil demand through 2035 is expected to originate from India alone. The IEA’s report indicates a significant shift in the global oil landscape, stating that while China accounted for over 75% of oil demand growth in the past decade, India is now taking the lead.

Rising Import Dependence and Refining Capacity

Despite efforts by the Indian government to enhance domestic oil production, the country’s dependency on oil imports is projected to increase from 87% in 2024 to 92% by 2035. However, India’s refining capacity is also expected to expand, growing from 6 mbpd in 2024 to 7.5 mbpd by 2035. This increase positions India as a key player in the global transport fuels market. The IEA notes that since 2022, India has become a significant supplier of refined products, processing Russian crude oil that was previously directed to Europe. With an anticipated global increase of 9 mbpd in refining capacity between 2024 and 2035, India is expected to contribute the largest share of this expansion.

Natural Gas and Coal Demand Outlook

India’s natural gas demand is projected to nearly double, reaching 140 billion cubic meters (bcm) by 2035, primarily driven by the growth of city-gas distribution networks. Liquefied natural gas (LNG) imports are also expected to rise significantly, increasing from 35 bcm currently to 50 bcm by 2035. In contrast, coal production in India is anticipated to grow by approximately 50 million tonnes of coal equivalent (Mtce) by 2035, despite a global decline in coal usage. The IEA emphasizes that this growth will help mitigate the need for coal imports, even amid strong domestic demand. Notably, Coal India Ltd. is expanding its Gevra mine, which will become Asia’s largest coal mine, alongside plans for 36 new mines over the next five years.

India’s Energy Leadership Beyond Oil

The IEA describes India as the primary driver of global energy demand growth, with overall consumption expected to rise by over 15 exajoules by 2035. This increase is nearly equivalent to the combined growth of China and Southeast Asia. India’s GDP is projected to grow at over 6% annually, with the transport and industrial sectors leading the rise in fuel consumption. The report also indicates that India’s carbon emissions are likely to peak around 2040 at approximately 3.4 gigatonnes per year. As part of its commitment to achieving net-zero emissions by 2070, India has already met its target of 50% non-fossil power capacity five years ahead of schedule. By 2030, the share of renewables in India’s installed capacity is expected to reach 60%, rising to 70% by 2035, with solar and wind energy projected to constitute nearly one-fifth of the country’s total energy mix by 2050.

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