India’s domestic oil demand is projected to grow at a compound annual growth rate (CAGR) of 4% over the next decade, according to S&P Global Commodity Insights. As of 2025, the country’s oil consumption has reached 4.8 million barrels per day (MBPD), marking a 4.3% increase from the previous year. Current crude oil demand stands even higher, at 5.4 MBPD.
Demographics and Economic Growth Fuel India’s Energy Appetite
Pulkit Agarwal, Head of India Content (Cross Commodities) at S&P Global, attributed the sustained rise in oil demand to favourable demographics and robust economic growth. “India is rapidly becoming a key player in global oil demand growth,” he stated. “While the overall base is still small, the trajectory is clear and gaining momentum,” Agarwal added.
Global Price Pressures
India’s appetite for oil continues to grow. However, global oil prices have softened in 2025 due to sluggish international demand and expanding supply from both OPEC+ and non-OPEC nations.
India Deepens Energy Ties with Russia
India’s sourcing strategy for crude oil continues to evolve, with a notable pivot toward Russian imports entering its fourth year. According to Agarwal, this shift remains largely undisturbed, suggesting a long-term realignment in India’s energy trade dynamics.
Petrochemical Demand to Outpace GDP Growth
Stuti Chawla, Associate Director of India and Middle East Chemicals Pricing at S&P Global, noted that India’s petrochemical demand is likely to outstrip GDP growth in FY2025–26 (April–March). This resilience comes despite short-term concerns over declining urban consumption and inventory build-up amid ongoing tariff uncertainties.
Global Petrochemical Industry Banks on India
As reported by energywatch.in, global petrochemical producers are increasingly turning to India as a crucial demand engine for 2025. Chawla added that this shift comes in an environment marked by weak consumer sentiment, tightening margins, and industry overcapacity.
Clean Energy Push Faces Structural Hurdles
Gauri Jauhar, Executive Director of Energy Transition and Cleantech Consulting at S&P Global, emphasized the complexity of India’s net-zero ambitions. She stressed that achieving clean energy and transition targets will require close alignment between policy, regulation, and corporate action, along with consistent implementation.
Green Energy Growth Slowed by Cost, Coexistence of Fossil Fuels
Pulkit Agarwal addressed the challenges of India’s clean energy shift, emphasizing that high green energy costs remain a major barrier to faster adoption. “Transition doesn’t mean elimination,” he explained. “Just as oil didn’t phase out coal entirely, fossil fuels will likely continue to play a role even as clean energy scales up,” he added. India’s energy story in 2025 showcases growth, diversification, and complexity. Strong domestic fundamentals drive this progress, while global dynamics and transitional challenges shape its trajectory.
