(Bloomberg) -- India’s growing middle class will soon make it the third-biggest oil consumer, reshaping the global energy map as China uses less and the U.S. produces more.
India will overtake Japan this quarter, International Energy Agency estimates show. The country’s galloping demand growth may eventually surpass China’s, a shift that was unforeseen just a few years ago.
As living standards improve, the number of Indians buying cars and trucks has risen, boosting gasoline use by 19 percent in April alone from a year earlier. The International Monetary Fund predicts the economy will swell by 7.5 percent this year as Prime Minister Narendra Modi makes business reforms, beating Chinese growth for the first time in a quarter-century.
India “reminds me of China a decade ago,” said Amrita Sen, chief oil analyst at London-based consultants Energy Aspects. “The demand growth is unbelievable.”
The country’s unbridled thirst for oil has helped bolster crude prices as they start to recover from a six-year low. It’s a further jolt to the energy market after the U.S. shale revolution pushed Russia out of the top spot for natural gas production and paved the way for the first American exports.
The IEA estimates India will consume about 4.1 million barrels of oil a day this quarter, compared with Japanese demand of 3.8 million barrels a day. The U.S. and China are the world’s top oil users.
Oil has rebounded to about $60 a barrel from $45 a barrel in January. A price of $65 would be “equitable,” Indian Oil Minister Dharmendra Pradhan said Wednesday in Vienna, where the Organization of Petroleum Exporting Countries is meeting to discuss production limits. India imports about 85 percent of its oil, with the majority coming from OPEC countries.
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