Weaker-than-expected oil imports to Asia have raised concerns about oil demand forecasts for 2025. While oil imports in January and February were 780,000 barrels per day (bpd) lower compared to the same period last year, the year is still unfolding, and more changes could occur, including further challenges for oil prices.
According to LSEG Oil Research, as reported by Reuters’ Clyde Russell, the 780,000 bpd drop brought Asia’s daily oil intake to 26.17 million barrels. China was the primary driver of this decline, with its crude imports falling by 840,000 barrels per day in the first two months of 2025. The daily average for China stood at 10.42 million barrels, down from 11.26 million barrels during the same period in 2024.
This trend aligns with reports about Chinese refiners reducing their production due to the end of cheap Russian crude. The price increase stems from the Biden administration’s latest sanctions on Russia’s oil industry, which have impacted the supply of ESPO crude, a favorite among Chinese refiners. The U.S. sanctions on Russian oil tankers have significantly reduced the number of available vessels to transport this crude to China. As the cost of procuring ESPO crude rises, independent refineries in China are reducing their output. However, there are indications that this situation may improve. Russia has reportedly begun redirecting tankers, previously used for shipments to Western ports, to the Far East-China route to prioritize exports of ESPO crude. This adjustment, according to Bloomberg, suggests that supply issues—not demand—are driving the slowdown in Asian oil imports.
Further reports indicate that Chinese oil imports from both Russia and Iran are expected to rebound as the tanker market adapts to new challenges. The adjustment includes as many as 11 non-sanctioned tankers that have recently joined the oil route from Russia to China, some of which previously carried Russian oil to India. This suggests that access to affordable oil supply, rather than a lack of demand, is the main issue facing Asia’s oil market.
Although there are questions about whether China’s oil demand has peaked, major energy traders, including Vitol, predict that global oil demand will remain stable at around 105 million barrels per day until at least 2040. While gasoline demand may decline, demand from the petrochemicals industry is expected to rise, offsetting the reduction.
In the short term, China will continue to be a key driver of oil demand growth, despite the weak start to the year. The causes of this weak start, however, are linked to external factors, not underlying demand. While China’s contribution to global oil demand growth has been significant—accounting for about 60% of growth until 2020—this share is expected to decrease to around 19% this decade, according to the International Energy Agency (IEA). In contrast, other Asian countries, particularly India, are expected to pick up the slack with fast-growing demand.
India is projected to account for 25% of global oil demand growth this year, with estimates showing an increase of 330,000 barrels per day. India’s gas consumption is also expected to double by 2040 and triple by 2050, suggesting a strong long-term trend for oil demand growth in the country.
All signs point to the weak start for Asian oil imports being a temporary setback, influenced by U.S. foreign policy rather than any fundamental shift in demand. The new U.S. administration is working to increase oil demand by ending the war in Ukraine and potentially lifting sanctions on Russian oil exports. If this scenario unfolds, it could lead to a shift in bearish oil demand forecasts, as has happened before when demand outpaced expectations. Even the IEA has had to revise its forecasts multiple times as demand continued to surprise on the upside.
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