OPEC blames lower oil demand on Chinese economy and electric vehicles

Economic uncertainty in China is having a raw effect on the global energy outlook. OPEC’s latest monthly report on the oil market says it now expects the world to consume 2.1 million barrels of oil a day more than last year, instead of the 2.2 million barrels a day it had forecast.

“This slight revision reflects actual data received for 1Q24 and in some cases for 2Q24, as well as lowering expectations for China’s oil demand growth in 2024,” the body said.

It is not that industrial production is expected to decline. Instead, the constraint comes from China’s consumer sector, where a slowdown in investment in housing and office buildings squeeze discretionary spending. In addition, another key user base is slowly drying up.

“Headwinds from the real estate sector and increasing penetration of LNG trucks and electric vehicles could weigh on demand for diesel and gasoline,” the OPEC report said.

China figures prominently in several other major oil industry stories. Reuters reports that Saudi Aramco, the world’s largest oil company, has said it expects to do so start sending fewer barrels to China in response to the expected reduction in demand. Iran, another major supplier, is skirting around US sanctions by shipping supplies to China and increasing exports to their countries. the highest levels since 2018 in process.