India set to become new powerhouse in global oil & gas demand

After dominating the global oil and gas demand landscape for more than a decade, China is now giving way to a new leader — India. A recent Moody’s report reveals that India is set to surpass China as the primary driver of global oil and gas demand growth over the next ten years. This marks a significant shift in the global energy equation, fueled by India’s accelerating economic expansion, robust infrastructure push, and the rising energy needs of its growing middle class.

After over a decade of China leading the global oil and gas demand narrative, the tide is turning. A recent report by Moody’s highlights that India is now poised to overtake China as the largest contributor to global oil and gas demand growth over the next decade. This transition reflects a broader shift in global energy dynamics, driven by India’s rapid economic growth, infrastructure development, and expanding middle class.

India’s transformation is underpinned by a confluence of factors. The country’s economy is growing steadily, with real GDP projected to rise by 6.3% in 2025 and 6.5% in 2026 — the highest among G-20 nations. This growth is fuelling increased mobility and industrial activity, both of which are heavily energy-dependent. India’s state-run oil marketing companies are ramping up investments in refining capacity, further supporting the surge in fuel demand.

According to the Moody’s report, India’s oil consumption is expected to grow at an annual rate of 3% to 5% over the next five years. In contrast, China’s oil demand is nearing its peak. With economic growth slowing and electric vehicle (EV) adoption accelerating, China’s appetite for fossil fuels is cooling. Moody’s anticipates that China’s crude consumption will peak in the next 3–5 years.

Supporting this outlook, OPEC’s latest global forecast indicates that India’s oil demand will rise from 5.55 million barrels per day (bpd) in 2024 to 5.99 million bpd by 2026 — a growth of over 7.9% in just two years. In comparison, China’s demand is expected to grow by only 1.5% in 2025 and 1.25% in 2026.

Natural gas is also becoming an increasingly important part of India’s energy mix. The government aims to increase the share of natural gas in the energy basket from the current 6% to 15% by 2030. Sectors such as fertilisers, petrochemicals, and city gas distribution are driving this demand. The annual growth rate for gas consumption is projected to be between 4% and 7% through the end of the decade. However, challenges such as high costs and inadequate infrastructure could hinder faster adoption.

Meanwhile, China is working to reduce its reliance on imported oil and is pushing for energy self-sufficiency, driven by strong policy support for cleaner energy sources. While gas demand in China will still grow due to decarbonisation efforts, the rate of growth is expected to decelerate due to economic slowdown and saturation.

Even as the United States remains the world’s largest oil consumer, with demand expected at 20.5 million bpd in 2025, it is India that is increasingly setting the pace for demand growth. Global oil demand is projected to grow by 1.3 million bpd annually in both 2025 and 2026 — with India accounting for a significant share of this increase.

As the global energy landscape evolves, India’s role is becoming more central than ever. Its rising demand is not only reshaping energy trade flows but also positioning the country as a key player in future discussions on energy security, transition, and sustainability.