India’s petrol demand is expected to peak by 2035 as electric vehicles gain popularity, ethanol blending expands and more vehicles shift to alternative fuels, according to Indian Oil Corporation (IOC) Chairman A. S. Sahney. The forecast signals a potential turning point for India’s fuel market, with the country’s largest state-run refiner preparing for changes in how households and businesses consume energy.
Speaking at an industry event in Goa on October 28, 2026, Sahney said gasoline, also known as petrol or motor spirit, was facing pressure from multiple directions. However, the outlook is not the same for every petroleum product. Indian Oil expects diesel and aviation fuel demand to continue growing, supported by industrial activity and the expansion of air travel. Demand for heavier petroleum products, including fuel oil and petroleum coke, is also expected to rise.
Key Takeaways
- Petrol demand outlook: Indian Oil’s chairman expects Indian gasoline demand to peak by 2035.
- Electric vehicles: Greater adoption of EVs could reduce the growth of petrol consumption.
- Alternative fuels: Ethanol blending and increased use of gas-powered vehicles are additional factors influencing the outlook.
- Diesel and aviation fuel: Consumption is expected to continue growing as industrial activity and air travel expand.
- Refinery strategy: Changing demand patterns could influence refinery investments, product mix and long-term planning.
- Nuclear energy: Indian Oil is evaluating technologies such as small modular nuclear reactors, with any investment dependent on commercial viability.
Why Does Indian Oil Expect Petrol Demand to Peak by 2035?
Indian Oil’s forecast reflects several changes taking place in India’s transportation sector. Petrol demand is closely linked to the number of petrol-powered vehicles on the road, the distance they travel and the fuel efficiency of those vehicles.
Electric vehicles could gradually reduce petrol consumption as more consumers adopt battery-powered cars and two-wheelers. Unlike conventional vehicles, EVs do not require petrol for propulsion. Their impact on national fuel demand will depend on how quickly adoption expands and how much driving shifts from petrol-powered vehicles to electric alternatives.
Ethanol blending is another factor. Ethanol can be mixed with petrol, reducing the proportion of conventional gasoline in the finished fuel. Although ethanol blending does not eliminate the need for petrol, it changes the composition of the fuel consumed by vehicles.
The growing use of gas-powered vehicles could also affect petrol demand. Vehicles running on compressed natural gas, for example, use a different fuel source from conventional petrol cars.
Together, these developments could slow petrol consumption growth even as India’s vehicle population and mobility needs continue to expand.
How Electric Vehicles Could Change India’s Fuel Market
India’s transportation market is evolving as manufacturers introduce more electric models and charging infrastructure develops. Electric two-wheelers and three-wheelers are particularly relevant because these vehicle categories play an important role in everyday mobility and commercial transport.
As more vehicles shift to electricity, petrol demand may grow more slowly than it would under a scenario dominated by conventional internal-combustion engines.
However, a projected peak in petrol demand does not mean petrol vehicles will disappear by 2035. Millions of conventional vehicles could remain in service, and demand could vary significantly between cities, states and vehicle categories.
The timing of the peak will depend on several variables, including the affordability of EVs, battery costs, charging availability, consumer preferences, vehicle replacement cycles and government policy.
The forecast should therefore be understood as Indian Oil’s outlook rather than a guaranteed deadline for the decline of petrol consumption.
Ethanol Blending Adds Another Dimension
India’s ethanol-blending programme is intended to reduce dependence on conventional petrol and support the domestic biofuel industry.
When ethanol is blended into petrol, part of the finished fuel comes from a renewable feedstock rather than petroleum refining. This can reduce the amount of conventional gasoline required to supply the same volume of blended fuel, although the overall energy content and vehicle compatibility must also be considered.
Higher blending levels require sufficient ethanol production, distribution infrastructure and compatible vehicle technology. Fuel specifications and engine requirements are important because not every vehicle is designed to operate on every ethanol blend.
For refiners, ethanol blending creates a different operating environment. They must respond not only to the total volume of transport fuel consumed but also to the changing composition of that fuel.
Diesel and Aviation Fuel Demand May Continue Growing
While Indian Oil expects petrol demand to peak, Sahney indicated that diesel and jet fuel consumption would continue increasing.
Diesel is used extensively in freight transport, heavy vehicles, construction equipment, agricultural machinery and industrial operations. As India’s economy expands and infrastructure projects progress, these activities can support diesel demand.
Aviation fuel demand is tied to air travel, airline operations and airport infrastructure. Growing passenger traffic and greater connectivity can increase the amount of aviation turbine fuel consumed by airlines.
The differing outlooks show why a peak in one petroleum product does not necessarily signal a peak in total oil demand.
| Petroleum product | Indian Oil’s stated outlook | Main demand drivers |
|---|---|---|
| Petrol (gasoline) | Expected to peak by 2035 | EV adoption, ethanol blending and gas-powered vehicles |
| Diesel | Expected to continue growing | Industrial activity and transport |
| Jet fuel | Expected to continue growing | Aviation and air travel |
| Fuel oil and petroleum coke | Demand expected to rise | Industrial uses and other applications |
The outlook is significant for refiners because each product has different demand drivers and production characteristics.
Why Refiners May Need to Adapt Their Strategies
Refineries process crude oil into multiple products, including petrol, diesel, aviation fuel, liquefied petroleum gas and heavier petroleum products. They cannot always change their output mix instantly to match shifts in demand.
If petrol demand grows more slowly while diesel, aviation fuel and certain industrial products continue expanding, refiners may need to reconsider how they allocate capital, optimize processing units and develop higher-value products.
Indian Oil has already been expanding beyond conventional transportation fuels into petrochemicals and other products. Its longer-term investment decisions will need to account for expected demand, technology costs, competition and changes in energy policy.
The challenge is not simply to produce less petrol. It is to ensure that refinery capacity remains economically useful as demand patterns evolve.
The transition will also take time. Even if petrol demand approaches a peak, India will continue to need fuel for existing vehicles, and regional differences in vehicle ownership and infrastructure could make the transition uneven.
Indian Oil Is Also Evaluating Small Modular Nuclear Reactors
Sahney separately said Indian Oil was evaluating technologies including small modular nuclear reactors, with any final decision dependent on commercial viability.
Small modular reactors are nuclear power plants designed around smaller reactor units than conventional large nuclear facilities. They are being explored in several countries as potential sources of low-carbon electricity and industrial power.
For an energy company, such technology could offer a way to diversify beyond conventional petroleum operations. However, commercial viability depends on construction costs, regulatory approvals, financing, safety requirements, fuel supply and the availability of suitable projects.
Indian Oil’s evaluation does not mean the company has approved an investment or committed to building a nuclear reactor. It indicates that the company is assessing potential technologies as part of its broader energy strategy.
What the Forecast Means for India’s Energy Transition
The expected petrol-demand peak reflects a possible change in the balance between economic growth and conventional fuel consumption. India can continue expanding its economy and transportation network even if petrol demand eventually stops growing, provided alternative technologies meet a larger share of mobility needs.
The transition will also create new requirements for electricity generation, charging infrastructure, battery supply chains and fuel distribution. Meanwhile, conventional fuels will remain important for freight, aviation and many industrial applications.
For policymakers, the challenge is to support cleaner transportation while maintaining energy security and affordability. For refiners, it is to prepare for different growth rates across petroleum products rather than assume that all fuels will follow the same trajectory.
The Bigger Picture
Indian Oil’s forecast is an indication of how India’s energy mix may evolve over the next decade. Electric mobility, alternative fuels and changing consumer choices could weaken the long-term growth outlook for petrol even as the economy and demand for transportation continue expanding. The projected peak is therefore a potential structural shift, not an immediate end to petrol consumption.
At the same time, expected growth in diesel, aviation fuel and heavier petroleum products illustrates the complexity of the energy transition. Refiners will need to balance existing fuel demand with investments in new products and technologies. Whether India’s petrol demand peaks precisely in 2035 will depend on how quickly these changes unfold.
FAQs
1. When is India’s petrol demand expected to peak?
Indian Oil Chairman A. S. Sahney said on October 28, 2026, that Indian gasoline demand is expected to peak by 2035. This is a forecast, not a guaranteed date.
2. Why could petrol demand peak in India?
The main factors identified by Indian Oil are growing electric-vehicle adoption, continued ethanol blending and increased use of gas-powered vehicles.
3. Does this mean India’s total oil demand will peak by 2035?
No. The forecast specifically concerns gasoline or petrol. Indian Oil expects diesel and aviation fuel demand to continue growing, while demand for fuel oil and petroleum coke is also expected to rise.
4. How does ethanol blending affect petrol demand?
Ethanol is blended into petrol, replacing part of the conventional gasoline component of the finished fuel. Higher blending can reduce the quantity of petroleum-derived gasoline needed, although the overall impact depends on fuel consumption and the energy content of the blend.
5. Is Indian Oil planning to invest in nuclear energy?
The company is evaluating technologies such as small modular nuclear reactors. Sahney said any final decision would depend on commercial viability, so an investment commitment has not been established by the reported statement.
Looking Ahead
The coming years will show whether EV adoption, ethanol blending and alternative-fuel vehicles grow quickly enough to bring petrol demand to a plateau by 2035. Vehicle sales, fuel consumption data, infrastructure investment and changes in government policy will be important indicators of whether the forecast remains on track.
For Indian Oil and other refiners, the priority will be adapting investment plans to a market in which petroleum products no longer necessarily grow at the same rate. India’s energy transition is likely to involve both conventional fuels and newer technologies for years to come, making flexibility and long-term planning essential.
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