Oil Market Has Bigger Issue Than a Slowing China

INDIA IS THE stuff of dreams for the Organization of the Petroleum Exporting Countries (OPEC) and Big Oil: a rapidly developing nation of nearly 1.5 billion people where petroleum consumption is still in its infancy.

- Bloomberg

It's the next China—so the theory goes. Perhaps one day, but in 2025 it's still the stuff of dreams. For years, energy economists have talked about "structural tailwinds"—including benign demographics, a burgeoning middle class and accelerating urbanization and industrialization—that would propel Indian oil demand.

Those phenomena turned China into the world's engine of petroleum demand growth (along with everything else) for a quarter century. From 2000 to 2025, the Asian giant added an average of 485,000 barrels a day every year to global consumption. Now, the boom is ending. Weighed down by slower economic growth and the rapid uptake of electric cars, Chinese oil demand will expand by 135,000 barrels a day this year, according to the International Energy Agency. Except for the pandemic period, that would be the smallest annual increase since 2005.