ByCharles Kennedy– Feb 07, 2025, 9:30 AM CST
Fuel demand in India, the world’s third-largest crude oil importer, increased by 3.2% in January from a year earlier, although consumption was lower compared to December 2024, when holiday travel and the end of the monsoon season resulted in a surge in demand.
India’s fuel consumption, used by analysts as a proxy for demand, stood at 20.49 million metric tons in January 2025, up from January 2024, but down from the December figure of 20.73 million tons, government figures showed on Friday.
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Consumption of diesel, the most used fuel in India, rose by 4.2% year-on-year in January, but fell by almost 4% from December. Demand for gasoline jumped by 6.7% year-over-year, but edged down by 0.3% compared to December 2024, according to the data from India’s Petroleum Ministry.
In December, holiday travel caused a surge in India’s demand for gasoline and diesel, with gasoline seeing a 9.8% increase to 2.99 million tons and diesel demand up by 4.9% to 7.07 million tons.
The solid increase in December demand came after months of tepid consumption on the back of seasonal factors: during the monsoon season, there is not as much travel in India. There is also subdued agricultural activity during the monsoon, which affects diesel demand.
India’s oil demand growth is already exceeding Chinese demand growth.
India is expected to account for 25% of global oil demand growth this year, the U.S. Energy Information Agency (EIA) said in December.
In 2025, Indian oil demand is set to grow by 330,000 barrels per day (bpd). China will see a higher growth rate in 2025 compared to the weaker-than-expected increase in 2024. Yet, at 250,000 bpd growth in 2025, China will still lag India’s consumption increase, according to the EIA.
India surpassing China as the world’s top driver of oil demand growth isn’t surprising at all. The surprise, if any, came from the fact that this is happening a bit earlier than many forecasters had expected a year or two ago.
By Charles Kennedy for Oilprice.com
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