Jet fuel, gasoline propel India's 2024 oil demand; trend set to spill over into 2025

India's oil products demand grew by nearly 4% year over year in 2024, driven by strong demand for transport fuels and higher consumption from the infrastructure and household sectors, trends expected to continue into the new year, according to government data and analysts.

While jet fuel saw the highest growth among all petroleum products, gasoline and LPG demand also experienced strong increases, contributing to an overall 3.9% year over year rise in oil products demand to 240 million mt, or 5.1 million b/d, in 2024, latest provisional data from the Petroleum Planning and Analysis Cell of the oil ministry showed.

"A key factor in this rising consumption trend in 2024 was the rapid growth in automobile sales, which increased by an average of 9%, with gasoline vehicles comprising 80% of sales. This happened despite a slight shift towards electric vehicles. Additionally, flight departures increased by 9% year over year, boosting jet fuel consumption, as airport connectivity improved amid rising urbanization," said Himi Srivastava, principal oil research analyst for South Asia at S&P Global Commodity Insights.

LPG consumption also received a boost from higher penetration and government benefits for low-income families. Additionally, government spending, infrastructure development, increased construction activity, and strong manufacturing and services sectors further bolstered petroleum consumption, she added.

Product mix

In 2024, jet fuel demand rose 9.2% year over year to 8.85 million mt, gasoline demand increased 8.1% to 39.45 million mt, LPG demand grew 7.1% to 31.12 million mt and gasoil demand edged up 2.7% to 91.12 million mt, PPAC data showed.

"India's product mix in 2024 largely mirrored previous year's trends, with diesel accounting for about 38% of total consumption. This highlights diesel's critical role in powering India's transport, logistics, and agriculture sectors, which remain vital to economic activity. Meanwhile, LPG and gasoline contributed in a big way, underlining steady demand in domestic and personal mobility segments," said Rajat Kapoor, managing director for oil and gas at Synergy Consulting.

India's oil products demand rose 2% year over year to 20.67 million mt in December, PPAC data showed.

The rise in demand was primarily driven by diesel and gasoline, which saw increases of 110,000 b/d and 89,000 b/d, respectively. Notably, jet fuel consumption reached an unprecedented 200,000 b/d. The heightened consumption was fueled by strong personal mobility demand, favorable weather conditions, year-end travel, and the ongoing strength of India's economy, Srivastava said.

Outlook for 2025

"India's oil demand is expected to grow at least 3% in 2025, primarily driven by growth in diesel and petrol," a Mumbai-based analyst said.

According to Commodity Insights, India's growth momentum is expected to continue, with petroleum product demand projected to rise by 190,000 b/d, or 3.2%, year over year in 2025.

This growth will be led by diesel and gasoline, each forecast to increase by over 50,000 b/d. LPG and jet fuel will remain strong growth pillars, supported by new propane dehydrogenation plants, increased residential LPG usage, and the commissioning of two new airports. Additionally, a post-election uptick in road construction and industrial activities is expected to further boost bitumen and petcoke consumption, Commodity Insights added.

By most estimates, the Indian economy is expected to grow at 6.4% in 2024/25 (April-March), maintaining its position as a major driver of global growth at a time when the world economy is projected to remain relatively stagnant, according to a United Nations report. However, this would mark India's slowest growth pace in four years, driven by challenges such as weaker manufacturing performance and subdued corporate investment. A similar growth rate is anticipated for the following year, Kapoor said.

"The economic dynamics may temper the pace of growth in petroleum product consumption. While India is set to outpace other large economies, the strain of slowing growth compared to recent years could potentially moderate energy demand expansion in the near term," he added.

The International Energy Agency forecasts that India will lead global oil demand growth, with consumption expected to rise from 5.4 million b/d in 2023 to 6.7 million b/d by 2030, reinforcing its position as a global energy powerhouse.