New Delhi: After years of forecasts predicting an imminent peak in oil demand amid a swift shift to renewables, oil and gas made a quiet but unmistakable
comeback, with India emerging as a central driver of global consumption. Major energy outlooks – from BP and McKinsey to the IEA – pushed peak oil into the 2030s and revised 2050 demand upward. And every forecaster said India will emerge as the epicentre of global demand growth, with its rise in appetite for energy outpacing that of China and Southeast Asia combined. The revival of the ‘Oil is King’ narrative in 2025 was fuelled by policy delays, infrastructure bottlenecks, and geopolitical tensions.
European nations, long champions of the clean energy transition, leaned more heavily on fossil fuels as supply shortfalls and high prices persisted amid the ongoing Russia-Ukraine war. In the US, President Donald Trump’s fossil-forward policies reinforced this trend. The result: oil was back on the centre board. India’s oil and gas sector in 2025 was marked by shifting import patterns, policy reforms, rising demand and a push to strengthen energy security, underscoring the country’s evolving role in the global energy landscape.
It continued its heavy reliance on crude imports in 2025, with Russian oil remaining a key source despite international pressure. The US escalated calls for New Delhi to cut Russian purchases, even imposing a 50 per cent tariff on Indian goods, yet Russian crude still accounted for more than a third of India’s imports for most of the year, fuelling domestic refineries that produce petrol, diesel, and other petroleum products.
It was only with the enforcement of sanctions on major Russian exporters, Rosneft and Lukoil, in late November that imports were tempered, dropping from an average of 1.7–1.8 million barrels per day (bpd) to under 1 million bpd. Since Russian oil itself was not directly sanctioned, predictions that Indian imports would fall to zero remain unlikely, as refiners pivoted to non-sanctioned Russian entities to continue securing discounted crude.
The year also saw India diversifying crude supply, with US crude imports surging, particularly after Trump’s tariff, alongside expansion in LNG and LPG trade, reflecting broader efforts to reduce dependence on any single source. Domestic policy shifts included the notification of the Petroleum and Natural Gas Rules, 2025, introducing a modern regulatory framework to attract investment and simplify licensing for exploration and production.
Demand trends remained robust, with India’s oil consumption projected to grow faster than China’s in 2025 and forecasts showing the country set to account for a significant share of global oil demand growth through the next decade.
India’s refining capacity expanded steadily, reinforcing its role as a global refining hub. Despite infrastructure gains, crude oil and gas production remained under pressure from ageing fields, underscoring the need for new discoveries and upstream investments to reduce high import dependence. State-owned Oil and Natural Gas Corporation (ONGC) roped in super major BP as a technical partner to revive output from its mainstay Mumbai High fields.
Natural gas consumption grew, supported by pipeline network expansion and a stronger city gas distribution footprint, reflecting policy shifts toward cleaner fuel adoption as part of broader transition goals. On the price front, 2025 emerged as one of the calmest years in recent oil market memory. Brent crude traded largely in a narrow band between the low-USD 60s and low-USD 70s per barrel for most of the year, before easing to around USD 59-60 by mid-December, without the sharp spikes that typically define oil cycles.
This price stability persisted despite wars, sanctions, tariffs, and shipping disruptions. The calm was underpinned by rising supply from non-OPEC producers, such as the United States, Brazil, Guyana, and Canada, disciplined OPEC+ output management even as inventories built, subdued demand growth in China and Europe, and a rise in floating storage.
Two consecutive years of low prices and muted volatility are rare in oil market history. Unlike the brief lulls seen after the Asian financial crisis in 1998–99 or the shale glut of 2015–16 – both followed by sharp resets – the current calm appears more durable, reflecting diversified supply, weaker demand growth, and markets increasingly conditioned to geopolitical noise.
For major importers like India, the stability provided a welcome breather. Just like in COVID times, the government raised excise duty on petrol and diesel without raising retail fuel prices. The increase in tax, which brought in much-needed additional revenues for the government that had given major income tax relief, was adjusted against the rate reduction warranted from the fall in oil prices.
As 2025 draws to a close, the oil and gas industry faces a nuanced outlook – supply dynamics remain influenced by geopolitical risks and evolving demand profiles, while climate pressures and strategic pivots among global majors signal a sector in transition heading into 2026.
