As global oil markets face weakened fundamentals in 2025 due to sluggish demand and mounting supply from both OPEC+ and non-OPEC+ countries, India emerges as a rare source of energy demand optimism. According to experts at S&P Global Commodity Insights, India is expected to play an increasingly pivotal role in global energy dynamics, with strong demand growth, strategic diversification of supply sources, and a multi-dimensional approach to the energy transition.
Oil Market Volatility and India’s Growing Role as a Demand Driver
According to Pulkit Agarwal, Head of India Content (Cross Commodities), S&P Global Commodity Insights, “Global oil prices have lost some shine in 2025 Year-to-date on the back of a challenging demand environment exacerbated by supply growth from OPEC+ as well as beyond. On the demand side, while the absence of Chinese demand growth continues to be felt, as the market continues to look for a demand growth leader, while trade and tariff issues are resulting in uncertainties regarding pace of economic and hence oil demand growth. On the supply side, we are witnessing the start of a long-anticipated dial down of supply restraint from OPEC+, even as non-OPEC+ supply continues to grow. The question remains if the markets can absorb all this additional supply, and the bigger question remains – at what price. The trade and tariff policies, and its implication is a big unmeasurable unknown, and is weighing on the weak fundamentals for the oil markets.”
“For India, oil demand continues to grow helped by favourable demographics and economic growth. India is quickly assuming a prominent place in the global oil demand growth order, while the base is still small to have an oversized implication on the global markets. India’s choice of oil sources continues to evolve, as India’s pivot to Russia continues largely unhindered in the fourth year of their meaningful initiation. For the oil markets- OPEC+ remains a major wildcard, and the supply growth trajectory will be keenly eyed. Iran remains another wildcard, as signs of a geopolitical thaw could throw another spanner for OPEC+’s already tough balancing act. China’s demand trajectory is still a major factor both for the near-term markets in the form of marginal balances, but also for the long-term watchers in terms of behaviour of oil consumption curve for a large consumption centre. Non-OPEC+ supply growth will be challenged by the lowering of prices, but the extent of the same is another wildcard going ahead,” he added.
India’s Energy Trilemma: Growth, Transition and Security
Gauri Jauhar, Executive Director, Energy Transition & Cleantech Consulting, S&P Global Commodity Insights, said “India is riding the global energy transition wave, while navigating the energy demand of economic ascent, an urban surge and contending with high pollution levels. By S&P Global estimates, India will transition to an upper middle-income economy by the mid-2030s and will be adding urban population close to the size of the current US by 2050. Meanwhile, India also faces high pollution levels as reflected in particulate matter PM2.5 levels. With coal, along with renewables, representing India’s resource abundance, there is a natural fossil fuel imprint led by coal in power and oil and gas in other core sectors.”
“As we look to the future, there are three S&P Global Scenarios which show varying speeds of the acceleration of the energy transition. In base case, fossil fuels remain foundational, with only a slight decline by 2050 as renewables rise. In an accelerated greening scenario, share of fossil fuels has the potential to decline to 33% by 2050 as renewables in the primary energy mix approach close to 30%. In a more challenged global scenario called Discord, fossil fuels remain at 77% in the primary energy mix by 2050 with coal supplying just over 50% of the primary energy mix in 2050. Facing the energy trilemma requires the India energy system to solve for energy accessibility, affordability, and security while transitioning. Energy security considerations run through oil, gas, and coal with India importing ~87% of oil, ~50% of gas, and ~26% of coal in 2024. Achieving net zero, energy transition targets across multiple technology options will require connecting the dots of policy, regulatory and corporate action with a push for greater consistency,” she added.
Coal to Remain Core as Demand Surges by 60% by 2050
As per Pritish Raj, Managing Editor for Asia Thermal Coal, S&P Global Commodity Insights, “India’s coal demand is expected to rise around 60% by 2050, and most of the incremental demand will be met by domestic supply. The non-power sector, as the key contributor to import growth, is expected to drive the imported thermal coal demand. India’s pace of domestic coal production has been phenomenal; going by the same, our estimate is that India’s 1.5 billion mt production target is a reasonable expectation, fuelled by the multi-pronged approach involving private investments, mine auctions, mechanized coal transportation, as well as friendly government policies. Rise in population, rapid economic growth, and higher reach of electricity and disposable income warrant this growth.”
“Improving domestic coal supply will not eliminate the requirement for imported coal. Despite being one of the world’s largest producers of coal, India has gaps in the quality and availability of domestic coal. As a result, imported coal plays a vital role in meeting the demand. As per S&P Commodity Insights’ outlook, India’s dependence on imported coal is expected to continue, with mid-term 2030 outlook projections at about 250 million tons by 2030, and thermal coal imports in the range of 150-180 million mt. This will be driven by import-based power plants, but the lion’s share of imports is likely to go to the non-power sector, and the power sector may continue to import 60-80 million mt of coal for electricity production through 2030. Domestic coal below a certain specification is mired by high ash content, with the majority in the range of 30%-45% compared to imported coal’s 6%-20%. The scarcity of high calorific value coal and high sulfur content adds to the domestic market’s woes, as a substitute of that can currently be found only in seaborne coal. While India is working aggressively towards streamlining domestic coal transport issues, shortage of railway rakes, slow progress in dedicated freight corridors and expensive transportation continue to support import demand.”
“Installed Power Capacity to see more than fourfold increase by 2050 – While the share of coal in the power mix may go down from current over 70% to 66% by 2030, in terms of generation share it’ll rise. We estimate that number to be around 1600 TWh by 2030 that’s going to come from coal. This is on the back of overall increase in power demand owing to rise in population, economic growth in upwards of 6% and a projection of power demand increase of over 5% annually. The decline in percentage share for coal is primarily due to doubling of solar-based power – from 184 TWh to 360 TWh in 2030. Share of solar-based power in India’s generation mix is expected to rise from 8.54% in 2024 to 14.58% by 2030,” he added.
Chemicals: Global Petrochemical Giants Eye India Amid Weak Global Sentiment
Stuti Chawla, Associate Director, India and Middle East Chemicals Pricing, S&P Global Commodity Insights, said, “In a world plagued with slowing consumer demand, uncertainty over tariffs, tighter margins and over-capacity, global petrochemical producers are betting on India as a key demand driver in 2025. India’s petrochemical demand is likely to outpace GDP growth in 2025-26 (Apr-Mar), despite concerns over a drop in urban demand and inventory build-up seen in the domestic markets amid tariff concerns.”
“Though India’s appetite for petrochemicals remains strong, in fact, the strongest in Asia, it has not resulted in good tidings for domestic petrochemical producers. Their margins remain under pressure as the cycle of capacity additions continues in China, the Middle East and the rest of Asia, leading to oversupplied markets. Chemical producers in India are looking at diversifying into specialty chemicals as well as upstream and downstream integration to compete with the onslaught of cheaper imports and maintain a stronghold in the domestic market,” she added.
Looking Ahead: India’s Role in New Global Energy Order
India’s energy evolution is emblematic of the broader global energy narrative, marked by ambition, complexity, and trade-offs. As the world grapples with energy security and net-zero goals, India’s story will be central in shaping both demand growth and innovation in balancing development with decarbonization.