India is on track to become the fastest-growing major oil consumer in the world, with demand set to outpace China through 2026, according to the latest OPEC Monthly Oil Market Report. As the world’s third-largest crude consumer, India is expected to see its oil demand grow by more than double the rate of China in the next two years, powered by its expanding economy and rising energy needs.

Oil Demand Growth Outpaces Major Economies

India’s oil demand is projected to increase from 5.55 million barrels per day (bpd) in 2024 to 5.74 million bpd in 2025, marking a 3.39% growth. By 2026, demand is expected to reach 5.99 million bpd, reflecting a 4.28% rise. This rate surpasses China’s projected growth of just 1.5% in 2025 and 1.25% in 2026. Although the United States will remain the largest consumer in absolute terms—estimated at 20.5 million bpd in 2025—its growth will be marginal at 0.09% next year and 0.6% the year after.

OPEC’s overall forecast for global oil demand remains unchanged, with an increase of 1.3 million bpd anticipated in both 2025 and 2026.

Economic Drivers Behind India’s Oil Surge

The upbeat outlook for India is underpinned by robust economic activity and sustained policy support. “India’s economy continued to expand at the beginning of the year,” the report noted. Key contributors include strong consumer spending, high infrastructure investment, and ongoing government support for priority sectors such as transport and manufacturing.

Meanwhile, the report highlighted that diesel remains the primary driver of oil demand growth in India. Bitumen demand is also surging, fueled by large-scale road construction projects. Additionally, increased need for transport fuels, along with a growing petrochemical sector, is expected to boost consumption further.

According to OPEC, India’s oil product demand will rise by 188,000 bpd in 2025, averaging 5.7 million bpd. In 2026, demand is set to climb by another 246,000 bpd to 6.0 million bpd, buoyed by strong performance in both the manufacturing and services sectors. Inflation is easing, and ongoing trade negotiations are expected to offset some negative effects of newly introduced tariffs.

Rising Imports and Changing Market Dynamics

India’s reliance on imported crude remains significant, with over 85% of its oil needs met by foreign sources. Crude oil imports hit a record 5.4 million bpd in March, driven by a month-on-month increase of over 5%. Product imports also grew by 2%, primarily due to higher liquefied petroleum gas (LPG) inflows.

On the export front, India saw a nearly 3% drop in refined product shipments, although strong diesel and fuel oil exports partially offset declines in naphtha and gasoline. As for import sources, data from energy analytics firm Kpler shows that Russia retained its top spot, supplying 36% of India’s crude imports in March. Iraq followed with 17%, and Saudi Arabia contributed 11%.

With India’s economy showing resilience and its infrastructure ambitions remaining on track, oil market trends suggest the country will play an increasingly central role in shaping global demand in the years ahead.