Oil Reclaims Centre Stage as Transition Timelines Stretch and India Steps Forward
After years of predictions that oil demand would peak imminently as renewables surged, the global oil and gas sector made a quiet but unmistakable comeback in 2025. Major energy outlooks revised their assumptions, pushing peak oil into the 2030s and raising long-term demand projections—placing India firmly at the centre of the next phase of global consumption growth.
From BP and McKinsey to the International Energy Agency (IEA), leading forecasters converged on a common conclusion: India will be the epicentre of global oil demand growth, outpacing China and Southeast Asia combined over the coming decade. The revival of the “oil is king” narrative was driven by policy delays, infrastructure bottlenecks and persistent geopolitical tensions that slowed the energy transition.
As one industry outlook put it, “The transition is real, but it is slower, messier and more oil-dependent than previously assumed.”
Policy Delays and Geopolitics Put Oil Back in Focus
The resurgence of oil’s relevance in 2025 reflected a recalibration by governments grappling with energy security. European economies—long champions of rapid decarbonisation—leaned more heavily on fossil fuels as supply shortfalls and elevated costs persisted amid the Russia–Ukraine war. In the United States, President Donald Trump’s fossil-forward stance reinforced the trend, prioritising domestic energy output and affordability.
Together, these dynamics returned oil to the centre board of global energy policy, even as long-term climate commitments remained intact.
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India’s Import Strategy Evolves Under Global Pressure
India’s oil and gas landscape in 2025 was defined by shifting import patterns, policy reforms and rising demand. Despite international pressure, the country continued to rely heavily on crude imports, with Russian oil remaining a key source for most of the year.
Russian crude accounted for more than one-third of India’s imports, fuelling domestic refineries that produce petrol, diesel and other petroleum products. The United States stepped up calls for India to curb purchases, even imposing a 50 percent tariff on Indian goods, but volumes remained resilient until late November.
It was only after sanctions were enforced on major Russian exporters Rosneft and Lukoil that imports moderated—falling from 1.7–1.8 million barrels per day to under 1 million bpd. Since Russian oil itself was not directly sanctioned, a complete halt was unlikely, with refiners pivoting to non-sanctioned entities to continue accessing discounted barrels.
Diversification Gains Pace Across Crude and Gas
At the same time, India accelerated efforts to diversify energy supplies to reduce reliance on any single source. Key shifts during the year included:
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A sharp rise in US crude imports, particularly after trade tensions intensified
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Expansion of LNG and LPG trade, supporting cleaner fuel adoption
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Broader sourcing strategies aimed at strengthening energy security
These moves underscored India’s pragmatic approach—balancing affordability, availability and geopolitical risk.
Policy Reforms Aim to Unlock Upstream Investment
On the domestic front, India introduced structural reforms to revitalise its oil and gas sector. The notification of the Petroleum and Natural Gas Rules, 2025 marked a significant step, offering a modern regulatory framework designed to simplify licensing and attract fresh investment in exploration and production.
Despite steady expansion in refining capacity—cementing India’s role as a global refining hub—upstream output remained under pressure due to ageing fields. To address this, state-owned ONGC brought in supermajor BP as a technical partner to revive production at the iconic Mumbai High fields.
An energy official noted, “Refining strength alone is not enough; new discoveries and technology-led recovery are critical to reducing import dependence.”
Demand Momentum Keeps India in the Global Spotlight
India’s oil consumption continued to grow robustly in 2025, with projections showing demand expanding faster than China’s. Forecasts suggest India will account for a significant share of global oil demand growth through the next decade, driven by:
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Rising vehicle ownership
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Expanding industrial activity
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Continued urbanisation and infrastructure build-out
Natural gas consumption also increased, supported by pipeline network expansion and a growing city gas distribution footprint—aligning with India’s transition goals toward cleaner fuels.
Calm Oil Prices Defy Geopolitical Odds
One of the most striking features of 2025 was the unusual calm in oil markets. Brent crude traded largely between the low-USD 60s and low-USD 70s per barrel, easing to around USD 59–60 by mid-December—without the sharp spikes typically associated with wars, sanctions and shipping disruptions.
This stability was underpinned by several factors:
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Rising supply from non-OPEC producers such as the US, Brazil, Guyana and Canada
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Disciplined OPEC+ output management, even as inventories built
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Subdued demand growth in China and Europe
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Increased use of floating storage
Two consecutive years of low volatility are rare in oil market history, suggesting a more durable equilibrium shaped by diversified supply and markets conditioned to geopolitical noise.
Fiscal Breathing Room for India’s Government
For a major importer like India, price stability proved beneficial. Much like during the COVID period, the government raised excise duties on petrol and diesel without increasing retail fuel prices. The move generated additional revenues—helping offset income tax relief—while passing on price reductions warranted by lower crude prices.
A Sector in Transition, Not in Decline
As 2025 draws to a close, the oil and gas industry faces a nuanced outlook. Geopolitical risks persist, climate pressures are intensifying and global majors are recalibrating strategies. Yet, oil’s comeback—anchored by India’s rising demand—highlights a transition that is evolutionary, not abrupt.
As one global forecast succinctly stated, “The energy transition is underway, but oil will remain indispensable well into the next decade.”
