China’s oil demand growth has decelerated due to weaker economic conditions and a transition to electric vehicles (EVs) and LNG-fueled trucks, industry experts reported at the APPEC conference in Singapore on Monday.
Currently, Chinese oil demand is increasing by about 200,000 barrels per day (bpd) annually. This is a significant drop from the 500,000 bpd to 600,000 bpd growth seen in the five years before the COVID-19 pandemic, according to Daan Struyven, head of oil research at Goldman Sachs, as reported by Reuters. The slowdown is attributed to a higher adoption of EVs and a growing use of LNG in trucks, which has reduced diesel demand.
Additionally, diesel demand has been negatively impacted by the ongoing property crisis and subdued economic growth.
Analysts suggest that the gradual shift towards EVs and LNG trucks may permanently reduce road fuel demand. However, China remains a crucial player in global energy and oil markets. An economic rebound could potentially drive up oil demand once again.
Russell Hardy, CEO of Vitol Group, predicts that domestic gasoline demand in China will likely peak either this year or next. Hardy explained in an interview with Bloomberg that the peak is expected not due to reduced transportation but due to a shift in the vehicle fleet towards electric options.
Earlier this year, Vitol adjusted its forecast for global peak oil demand to beyond 2030, citing a slower pace of energy transition as the reason.
Despite these changes, Vitol notes a decline in Chinese gasoline and diesel demand due to the rise of electrified transport and increased use of LNG for trucks.
The China National Petroleum Corporation (CNPC) also anticipates that demand for petroleum products in China could peak before the end of 2024. This forecast is based on the expectation that the energy transition will accelerate, curbing growth in oil product demand.