India's Evolving Crude Oil Market: Demand Surge, Supply Shifts, and Policy Impacts

Key Highlights:

1. Crude Oil Demand Growth – India’s consumption is set to reach 6.5-7 million bpd, driven by industrial expansion and infrastructure development.
2. Refining Capacity Expansion – Numaligarh Refinery is scaling up from 3 MMT to 9 MMT, improving supply chain stability.
3. Geopolitical and Trade Shifts – Sanctions on Indian firms and changing crude sourcing strategies may impact oil flows.
4. Energy Security and Sustainability – Increased biofuel blending and infrastructure investments aim to mitigate import dependency.

Petroleum Prices: Regional Trends in Bitumen and Lubricants

• In the Indian bitumen market, VG30 and VG40 prices fluctuate across regions. Vadodara lists VG30 at ₹47,352/MT and VG40 at ₹50,272/MT, while Haldia prices are slightly higher at ₹48,352/MT and ₹51,152/MT, respectively. 
• Kandla remains the most competitive, offering VG30 at ₹38,300/MT and VG40 at ₹39,200/MT. 
• In the lubricants segment, hydraulic and gear oils in Bhiwadi are priced as follows: Hydraulic Oil 68 at ₹87.00/LTR, Hydraulic Oil HLP46 at ₹95.00/LTR, Gear Oil 150 at ₹115.00/LTR, Gear Oil 220 at ₹120.00/LTR, Gear Oil 320 at ₹125.00/LTR, and Gear Oil 460 at ₹130.00/LTR, all available in barrel packaging.

India’s Crude Oil Demand on a Strong Growth Trajectory

• India's crude oil consumption is set to rise significantly, reaching 6.5-7 million barrels per day (bpd) in the short to medium term. This marks a substantial increase from 5 million bpd to 5.5 million bpd over the last three years, as highlighted by Union Minister for Petroleum and Natural Gas, Hardeep Singh Puri. The rise in demand aligns with India's economic growth trajectory, where energy utilization plays a crucial role in economic performance.
• India currently spends around $150 billion on energy imports, underlining its heavy reliance on foreign oil. To mitigate this dependency, the country is pushing for increased biofuel blending, having already achieved its 20% target six years ahead of schedule. Additionally, investments in domestic refining and infrastructure are expected to support supply stability.
• A major development in the supply chain is the expansion of the Numaligarh Refinery from 3 million metric tons to 9 million metric tons by 2025, with crude being transported from Paradip via a newly established 1,600 km pipeline. This initiative, along with the gas grid from Barauni to Numaligarh, underscores the government's commitment to improving energy security and reducing transportation costs. Moreover, the upcoming bamboo-to-ethanol refinery in Numaligarh aligns with India's broader push for sustainable energy solutions.
• While domestic production improvements continue, India's growing energy needs will still necessitate increased imports. With demand expected to grow by 20% or more, supply strategies will have to evolve to balance economic growth with energy security.

Petroleum News: Geopolitical Shifts and Their Impact on Oil Trade

• Offen tankers have delivered the first-ever shipment of Medanito crude to Asia, with the cargo heading to India. This marks a shift in crude sourcing as refiners turn away from Russian-trading vessels due to sanctions.
• Asia's crude oil imports have started 2025 on a weak note, with China, the region’s top importer, reducing its purchases. Additionally, new sanctions are impacting cargo flows, raising concerns about the accuracy of demand forecasts for the year.
• Warming relations between the United States and Moscow could significantly affect Russian crude flows to India. The movement of an ageing suezmax tanker has led to speculation about potential changes in India's crude purchasing strategy.
• The United States has imposed sanctions on four India-based companies for their alleged involvement in the trade and transportation of Iranian crude oil and petroleum products. These sanctions are part of ongoing efforts to curb transactions linked to Iran’s energy sector.
• India’s crude oil and condensate production in January 2025 stood at 2.5 million metric tonnes, reflecting a 1.2% decline compared to the previous year. However, petroleum product output increased by 8.3%, indicating a shift in refining dynamics.
• Oil India is planning to ramp up production with new exploration blocks and global partnerships. The company aims to produce 3.8 million tons of crude oil equivalent and 3.8 billion cubic meters of natural gas in the current fiscal year 2024-25.

Expert Opinion: The Push for Sustainability and Domestic Production

It is expected that India's crude oil demand will continue its upward trajectory, fueled by rapid industrial growth, expanding transportation needs, and infrastructural developments. The ongoing expansion of refining capacity and the push for alternative fuels will enhance supply resilience. However, global oil price volatility and geopolitical factors may pose challenges. As India strengthens its energy infrastructure, the market remains optimistic about long-term stability and sustainability in the petroleum sector.