A change is on the horizon for oil demand, with India set to eclipse China as the most important driver of global growth and as the world shifts to a greener future.
India’s transition from petrol and diesel-fuelled transport is expected to lag other regions, meaning its reliance on fossil fuels is likely to endure for much longer.
In contrast, China’s adoption of EVs has been fast, an ominous sign for long-term gasoline demand in the world’s biggest car market.
EV sales in China nearly doubled to 6.1 million units in 2022, compared with 48,000 vehicles for India.
India has lofty ambitions to transition its industries to greener energy options, but the nation is lagging other major nations.
While India is unlikely to replicate the scale of China’s oil network, traders and producers are betting on the South Asian nation into the next decade.
India’s swelling population, which already surpassed China, will help to underpin that growth along with consumption trends.
For oil, the end of the boom times is approaching, with refiner China National Petroleum Corp. calling a peak to Chinese oil consumption around 2030.
India is already playing a more prominent role in the oil market following the invasion of Ukraine more than a year ago.
India has become a major consumer of Russian crude, turning the OPEC+ producer’s oil into fuels that are often shipped to other regions.
India’s state-run refiners have been slow at modernising operations and still follow the old process of issuing tenders for spot purchases.
Still, India’s fast-growing crude appetite will position it as an opportunity for overseas traders and producers over the longer term.