Fossil Fuels Rebound: Peak Demand Predicted in 2030s, India a Key Growth Driver

Predictions of peak global oil demand, fueled by the rise of renewable energy, appear to have been premature. In 2025, fossil fuels regained traction, with India becoming a major consumer. Forecasts from leading energy analysts like BP, McKinsey, and the International Energy Agency now project peak oil demand will occur in the 2030s. These groups have also revised their 2050 demand estimates upward, according to PTI.

Across these updated forecasts, India stands out as a primary source of increased demand. Its anticipated growth in energy consumption is expected to outpace the combined growth of China and Southeast Asia.

**Factors Behind the Resurgence**

A combination of factors contributed to oil's renewed importance in 2025. These include:

• Policy Delays:** Implementation of clean energy policies faced setbacks.
• Infrastructure Limitations:** Clean energy infrastructure development lagged.
• Geopolitical Tensions:** Global tensions impacted energy markets.

Even European nations, despite their leadership in clean energy, increased their reliance on fossil fuels due to supply disruptions and elevated prices related to the Russia-Ukraine war. Furthermore, President Trump's support for fossil fuels in the United States contributed to oil's resurgence in the global energy mix.

**India's Evolving Import Strategy**

India's oil and gas sector is undergoing significant changes influenced by global trends. These shifts are evident in its import patterns, policy adjustments, and rising demand. While India remains heavily reliant on crude oil imports, Russian oil has played a significant role despite international pressure. Although the US has discouraged India from purchasing Russian oil and imposed tariffs on some Indian goods, Russian crude accounted for over a third of India's imports for much of the year, supplying domestic refineries producing essential fuels.

After sanctions were imposed on Rosneft and Lukoil in late November, imports from Russia decreased from approximately 1.7-1.8 million barrels per day to under 1 million barrels per day, according to PTI. Because the oil itself wasn't sanctioned, imports were unlikely to cease entirely. Refiners adapted by switching to non-sanctioned Russian suppliers to continue accessing discounted crude.

To mitigate dependence on any single source, India has diversified its oil imports. Purchases of crude oil from the US have increased, particularly following the introduction of new tariffs. Trade in liquefied natural gas (LNG) and liquefied petroleum gas (LPG) has also expanded. The Indian government introduced the Petroleum and Natural Gas Rules, 2025, establishing a new regulatory framework intended to simplify licensing and encourage investment in oil and gas exploration and production.

**Demand and Refining Capacity on the Rise**

Throughout 2025, demand remained robust. India's oil consumption is projected to grow faster than China's, and forecasts indicate that the nation will account for a substantial portion of global demand growth in the coming years. India's expanding refining capacity is solidifying its position as a global refining hub. That said, the reality is a bit more complicated. crude oil and gas production is facing challenges due to aging oil fields. In response, ONGC partnered with BP to enhance production at the Mumbai High fields. Increased natural gas usage, supported by pipeline improvements and expanding city gas distribution networks, aligns with the government's push for cleaner fuels.

**Stable Oil Prices Provide Economic Breathing Room**

Despite ongoing conflicts, sanctions, and trade disputes, oil prices exhibited surprising stability in 2025. Brent crude generally fluctuated between $60 and $70 per barrel, eventually settling around $59-60 by mid-December, according to PTI. This stability was supported by increased oil production in non-OPEC countries, such as the US, Brazil, Guyana, and Canada. Effective supply management by OPEC+ and moderate demand growth in China and Europe also played a role, as did increased floating storage. These stable prices offered relief to major oil importers like India. The government, similar to the COVID-19 period, increased taxes on petrol and diesel but refrained from raising retail prices, leveraging the decline in crude prices to manage the tax increase and boost revenue.

As 2025 concludes, the oil and gas sector faces a complex future. Geopolitical risks and rising demand continue to influence supply dynamics, while climate pressures and strategic shifts by global energy companies suggest an industry in transition as it moves into 2026, according to PTI.