Domestic diesel demand is projected to rise from 1.8 million barrels per day (mbd) in 2023 to 2.3 mbd in 2030, an increase of 4.5% annually, IEA said in its India Oil Market Outlook. By comparison, petrol demand is estimated to rise a modest 0.7% every year to 1 mbd in 2030 from 0.9 mbd in 2023.
For the last many years, diesel consumption has grown at a much slower pace than petrol as preference for petrol cars grew after deregulation eroded diesel’s price advantage.
Diesel-consuming commercial trucks “play an essential role in Indian manufacturing and commerce, which are set to continue to grow rapidly. This underpins our expectations of strong growth in diesel use,” the IEA said. The utilisation of public transport is expected to rise, reversing a trend that set in during the pandemic when people preferred private vehicles, and boosting diesel demand while restricting petrol sales growth, it said.
“Increasing vehicle electrification is another factor that disproportionately weighs on petrol demand growth but has a smaller impact on diesel,” the IEA said. EVs are expected to displace more than 200,000 barrels per day of oil consumption by 2030 in India, with 70% coming from lower petrol use.
The IEA expects India’s current car fleet of around 58 million cars to grow more than 40% by 2030.Diesel demand growth will account for almost half of the rise in India’s national oil demand, which is expected to increase by 1.2 mbd by 2030 to 6.6 mbd. The overall oil demand is forecast to rise 3.2% annually, lower than 4.5% of diesel. The oil demand growth in India is expected to surpass that of China’s in 2027, the IEA estimated. This would make India the largest driver of the global oil demand growth.The domestic demand for jet fuel is expected to increase by 6.9% per year to 0.3 mbd by 2030. India’s per capita jet fuel consumption is very low compared to the global average, which means the demand for the fuel can grow at a much faster pace, said Toril Bosoni, head of oil markets at the IEA.
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