As China’s fuel appetite cools, India emerges as the world’s next big energy consumer: Moody's

India’s oil buying patterns are also reflecting this rising demand.

A global shift in energy demand is underway and it’s moving away from China toward India. Over the next decade, India is set to become the largest contributor to global oil and gas demand growth, according to a new report by Moody’s, marking a pivotal rebalancing in the global energy landscape.

The transition is driven by India’s accelerating economic growth, infrastructure expansion, and surging transport needs, while China's slowing economy and electric vehicle boom are expected to curb its long-standing dominance in fossil fuel consumption.

“Crude consumption in China will peak in the next 3–5 years, while in India we expect annual growth of 3–5 percent in the same period,” Moody’s said, highlighting the scale of divergence between the two Asian giants.

Between 1998 and 2023, China led the world in oil demand growth almost every single year. But that trend may have reached its turning point. According to the U.S. Energy Information Administration, China’s oil consumption historically outpaced India’s by a wide margin. That edge is now narrowing, and fast.

India’s economy, projected to expand at 6.3 percent in 2025 and 6.5 percent in 2026, is powering ahead at a pace unmatched by any other G-20 nation, Moody’s said. This economic momentum is driving up demand for diesel and petrol, particularly as road networks expand and vehicle ownership climbs.

Meanwhile, state-run oil refiners are ramping up capacity to meet rising domestic demand, a strategic shift that could keep India’s oil consumption climbing steadily for years.

India is expected to register the fastest growth in oil consumption among major economies, nearly doubling China’s pace in the next two years.

According to OPEC’s latest global outlook, India’s oil demand will rise from 5.55 million barrels per day (bpd) in 2024 to 5.74 million bpd in 2025, a 3.39 percent increase. By 2026, demand is projected to hit 5.99 million bpd, marking a further 4.28 percent rise.

In contrast, China’s demand growth is forecast to slow to 1.5 percent in 2025 and just 1.25 percent in 2026. The U.S. will continue to be the world’s largest oil consumer, with over 20.5 million bpd expected in 2025, but its growth will be far more muted.

Despite softer numbers from the world’s two largest economies, global oil demand is still set to rise by 1.3 million bpd in both 2025 and 2026, with India leading the charge.

India isn’t just betting on oil. Natural gas is emerging as a key player in the country’s evolving energy mix.

The government aims to raise natural gas’s share in the energy basket from the current 6 percent to 15 percent by 2030. This growth will largely be powered by sectors like fertilisers, petrochemicals, and city gas networks, Moody’s noted. It expects annual gas demand growth between 4 percent and 7 percent through the decade.

But scaling up will require more than ambition. Moody’s flagged affordability and uneven infrastructure as major hurdles that could limit faster adoption of gas across India.

While India’s fossil fuel consumption trajectory is climbing, China is actively reducing its dependence on imported oil, driven by its shift towards cleaner energy and a broader push for energy self-sufficiency.

Moody’s said that while Chinese gas demand will continue to rise, boosted by decarbonisation policies, it will slow in pace, weighed down by moderating growth and a high existing base.

India’s oil buying patterns are also reflecting this rising demand. According to Reuters, the country is expected to import nearly 1.8 million bpd of Russian crude in May 2025, the highest in 10 months. The demand surge, particularly for lighter Russian grades, comes as Indian refineries undergo upgrades and scheduled maintenance.

Refiners are stepping up production, and with diesel remaining the backbone of India’s transport fuel needs, import levels are expected to stay elevated through mid-2025.