Mumbai, India – January 20, 2024 – India’s oil sector is set to witness a significant surge in 2024, driven by robust domestic demand and expanding global connections. According to the Organization of the Petroleum Exporting Countries (OPEC), India’s total oil consumption is projected to reach 5.59 million barrels per day, a substantial increase from 5.37 million barrels in 2023 and 5.14 million barrels in 2022. These figures are corroborated by the International Energy Agency (IEA), which forecasts a consumption level of 5.63 million barrels per day.
In response to internal demand growth and changing global market dynamics, India is actively revising its oil supply strategies. An Argus report highlights a shift in India’s reliance on Russian raw materials, influenced by secondary sanctions from the United States and alterations in pricing policies. Despite the fact that imports from Russia more than doubled in 2023, amounting to 1.75 million barrels per day, there is a noticeable trend towards decreasing interest in Russian oil and exploring alternative sources.
A significant development in India’s oil import strategy is the increased focus on oil imports from Iraq and the resumption of Venezuelan oil purchases following the easing of US sanctions. “Indian refiners stopped purchasing Venezuelan oil in 2020 due to US sanctions. After easing restrictions, Venezuela increased crude production to 800 thousand barrels per day in November and plans to reach 1 million barrels per day in the short term, up from about 680 thousand barrels per day a year earlier,” the Argus report stated. The report also noted potential competition from Iranian oil suppliers, who offered discounts exceeding those on Russian raw materials by the end of 2023. However, Indian companies are cautious about engaging with Iran due to ongoing US sanctions.
In addition to diversifying its oil sources, India is also focusing on strengthening its domestic market, particularly in the refining segment. Major refineries such as Indian Oil Corporation, Nayara Energy, Hindustan Petroleum, and Bharat Petroleum are expanding their capacities and diversifying their feedstock sources. This strategic move is not only enhancing their competitiveness in the global market but also reinforcing India’s position as a leading player in the energy sector.
The export of petroleum products from India continues to be strong, with European countries being the main export destinations. This consistency and diversification in export markets signify India’s growing influence in the international energy market.
In a related development, the Indian government has deferred a Rs 5,000 crore plan to fill parts of its strategic petroleum reserve, keeping in mind the emerging trends in oil markets. This decision reflects a strategic approach to managing national reserves in response to global market dynamics.
The current dynamics in the Indian oil sector illustrate the country’s adaptation to changing global trends and its strengthening role as a key player in the global energy market. The increase in domestic consumption and active diversification of supply sources underscore India’s commitment to achieving energy independence and exerting significant influence in the region.
