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China’s oil demand growth has been slowing down due to weaker economic performance and a shift to electric vehicles and LNG-fueled trucks, oil industry executives said at the APPEC conference in Singapore on Monday.
Right now, Chinese oil demand growth has slowed to about 200,000 barrels per day (bpd) each year, compared to 500,000 bpd-600,000 bpd annual growth in the five years before Covid, Goldman Sachs’s head of oil research, Daan Struyven, said, as carried by Reuters.
The slower growth is the result of higher EV penetration and rising LNG use in trucks, which has hit diesel demand.
Diesel demand has also suffered recently from the ongoing property crisis and lackluster economic growth.
But the gradual shift in transportation toward EVs and LNG trucks could be removing some road fuel demand permanently, according to analysts.
Still, China shouldn’t be dismissed as a key factor in global energy and oil consumption as an economic rebound could spur oil demand anew, according to other industry analysts.
China’s shift toward EVs will bring about domestic gasoline demand peaking either this year or next, according to Vitol Group’s CEO Russell Hardy.
“Gasoline is likely to peak this year or next year in China — not because nobody’s moving, but simply because the fleet is slowly changing towards electric vehicles,” the top executive of the world’s largest independent oil trader told Bloomberg in an interview published on Monday.
Earlier this year, Vitol pushed back its expected timeline for global peak oil demand beyond 2030. Hardy said in February that a slower pace of the energy transition would push peak oil demand beyond 2030.
Nevertheless, Vitol sees weakening Chinese gasoline demand growth and diesel demand due to the electrification of transport and greater use of LNG for fueling trucks.
Demand for petroleum products in China could peak before next year, the research unit of the China National Petroleum Corporation (CNPC) forecast earlier in 2024. The projection is based on expectations that the energy transition will continue gathering speed, eliminating oil product demand growth.
