China’s energy transition is slowing oil demand growth

China’s oil demand growth has slowed 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.

Currently, China’s oil demand growth has slowed to about 200,000 barrels per day (bpd) each year, compared with annual growth of 500,000 bpd-600,000 bpd in the five years before Covid, the oil research chief of Goldman Sachs, Daan Struyven, carried by Reuters.

The slower growth is the result of higher penetration of electric vehicles and the increasing use of LNG in trucks, which has affected diesel demand.

Diesel demand has also suffered recently due to the ongoing housing crisis and weak economic growth.

But the gradual shift in transportation to electric vehicles and LNG trucks could permanently eliminate some of the demand for road fuel, according to analysts.

However, China should not be dismissed as a key driver in global energy and oil consumption, as an economic rebound could boost oil demand again, according to other industry analysts.

China’s shift to electric vehicles will lead to a peak in domestic gasoline demand either this year or next, according to Vitol Group CEO Russell Hardy.

“Gasoline is likely to peak this year or next year in China – not because nobody is moving, but simply because the fleet is slowly shifting to electric vehicles,” said the chief executive of the largest independent retailer of the world’s oil for Bloomberg in an interview published Monday. .

Earlier this year, Vitol pushed back on its estimated timeline for peak global oil demand after 2030. Hardy said in February that a slower pace of the energy transition would push peak oil demand beyond 2030.

However, Vitol sees declining Chinese gasoline demand and diesel demand due to the electrification of transportation and greater use of LNG to fuel trucks.

Demand for petroleum products in China could peak before next year, the China National Petroleum Corporation (CNPC) research unit estimated in early 2024. The projections are based on expectations that the energy transition will continue to accelerate, eliminating growth the demand for petroleum products.

By Charles Kennedy for Oilprice.com

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