India is forecast to be the “single largest” source of global oil demand growth from 2023 to 2030, narrowly ahead of China, according to the latest report by the Paris-based autonomous intergovernmental organisation IEA (International Energy Agency).

The report titled ‘Indian Oil Market Outlook to 2030’ says India is on track to post an increase in oil demand of almost 1.2 million barrels per day (mb/d) over the forecast period, accounting for more than one-third of the projected 3.2 mb/d global gains.

It says India’s additional demand will be more “diversely spread” across product categories than in other major economies. “Only 18% of the country’s demand growth will be for petrochemical feedstock use, while globally this figure will be in the excess of 90%, and in China virtually all net gains will be for chemical production,” the report says.

The organisation has attributed the balanced growth profile to India’s “dynamic economic development trajectory” and relatively low per-capita fuel use. India’s oil consumption is set to increase at a faster pace than other countries, in part, because the country is still in the initial stages of economic development, it adds.

In particular, rapid progress in the manufacturing, commerce, transport and agriculture sectors is also projected to translate into continued sharp gains in diesel use.

Talking about India’s economic performance, the report says it’s been stellar since the start of the 21st century. “Annual GDP growth averaged 6.8% in the decade before 2020 and quickly reverted to trend after the pandemic. This has made the country a global economic powerhouse and the uncontested favourite with emerging market investors.”

India, it says, is on track to register the world’s fastest expansion among major economies in 2024 for a third straight year, with the International Monetary Fund (IMF) projecting it to contribute over 16% to global economic growth this year.

The World Bank shows the Indian GDP per capita was USD 2,400 in 2022 – behind the Democratic Republic of the Congo, Bangladesh and Angola, and a fraction of China’s USD 12,700. “A common phenomenon is that when developing countries achieve GDP per capita growth between the USD 2 000 to USD 10 000 range, growth in energy use is at its fastest,” the IEA says.

Also, India’s Strategic Petroleum Reserve (SPR) has a total capacity of 39.1 mb and currently holds 26 mb of crude oil in its storage sites. The Cabinet in 2021 had approved ISPRL to maintain 50% storage capacity filled at all times, which would be strategic. State-owned firm ISPRL can lease up to 30% of its crude reserves and trade up to 20% of crude oil capacity under Phase I of the SPR. In the event of any emergency, the government will have the first right to take all the crude in the storage sites.

As of the end of November 2023, industry stocks in India were estimated at 217.6 mb, near a record high. This covers 38.7 days of forward demand, slightly above the 2020-2022 average, as the demand is steadily increasing.

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