Oil Consumption Development Developments in China, India, & USA — Is 2025 Forecast Correct?

By Imran Last updated Dec 19, 2024

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The US Power Info Administration put out an attention-grabbing article at this time. The headline centered on progress of oil consumption in India in comparison with China — “India to surpass China as the highest supply of world oil consumption progress in 2024 and 2025.” I sat trying on the chart for a number of minutes fascinated about what’s occurring in several main markets. Right here’s the chart:

**Knowledge supply:** U.S. Power Info Administration, *Quick-Time period Power Outlook*, December 2024

As you may see, that is about progress, not whole oil consumption. China’s oil consumption boomed in 2023, principally attributable to a lot higher use of oil for manufacturing petrochemicals, however then it’s forecasted right here to develop minimally in 2024. Others have mentioned oil consumption will truly decline within the nation this yr and the CNPC Economics & Know-how Analysis Institute thinks oil consumption peaked within the nation final yr.

The Center East is rising demand for its personal main product, and the US is anticipated to have a small yr of progress this yr after an enormous financial rebound final yr. However the standout nation for progress of oil consumption is India. As I wrote two days in the past, India simply hasn’t lived as much as its personal hype and targets with car electrification, and that’s exhibiting increasingly because the nation continues to develop.

“Over 2024 and 2025, India accounts for 25% of whole oil consumption progress globally. We count on a rise of 0.9 million barrels per day (b/d) in international consumption of liquid fuels in 2024. We count on much more progress subsequent yr, with international oil consumption growing by 1.3 million b/d,” the EIA writes. “Pushed by rising demand for transportation fuels and fuels for dwelling cooking, consumption of liquid fuels in India is forecast to extend by 220,000 b/d in 2024 and by 330,000 b/d in 2025. That progress is probably the most of any nation in our forecast in every of the years.”

Sadly, with India up to now behind in car electrification and in addition utilizing liquid fuels a lot for cooking, and even rising that use considerably, it’s laborious to see the nation turning these developments round anytime quickly. Large change is required in India.

China is the extra uplifting, and possibly extra attention-grabbing story. As already famous, after a growth in 2023, progress has collapsed, however I’m not so positive the forecast for 2025 is a stable one from the EIA. Referencing electrical automobiles, economic system progress slowing, and inhabitants decline, progress of oil use within the nation shouldn’t be anticipated to be excessive based on the company, however the chart signifies a reasonably large chunk of progress in comparison with this yr and in comparison with the US. I’m considering it’s extra doubtless car electrification continues to hit oil use tougher than most forecasters count on (new EVs are going to be pushed greater than previous fuel automobiles, and EV gross sales might develop quicker in 2025 than they’re anticipated), and extra financial troubles may very well be on the horizon if China and the USA below Trump get into an even bigger and greater tariff battle. Probably? Who is aware of, however it’s a particular risk. It’s definitely doubtless when you imagine what Trump has repeatedly mentioned about tariffs.

In fact, regardless of standout progress slicing oil consumption progress, and even perhaps slicing oil consumption general now, China nonetheless burns lots of oil. The EIA factors out that India continues to be far, far behind China in that regard regardless of now seeing quicker progress in oil use. “Though India’s progress in share and quantity phrases exceeds China’s progress in our forecast, China nonetheless consumes considerably extra oil. Complete consumption of liquid fuels in India was 5.3 million b/d in 2023, whereas China consumed greater than triple that quantity at 16.4 million b/d in 2023, based mostly on estimates in our December STEO.”

As for the US market, effectively, that’s going to rely on whether or not our economic system continues to rebound/develop or whether or not there’s some sort of “shocker” and the US economic system hits a troublesome interval (as is usually the case below Republican administrations sooner or later).

We’ll see what occurs, however one thing tells me that we’re going to see a a lot completely different chart in 2025 than this forecast reveals.