Aerial view of China Petroleum & Chemical Corp.’s Jiujiang oil refinery. (Sinopec).

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China’s demand for oil could peak by the end of the decade – and can global oil markets continue to rely on China with the economic recovery still in limbo?

“For 20 years the oil market has depended on China, China, China to support the markets. The story is coming to an end,” Fereidun Fesharaki, chairman of Facts Global Energy, said at a recent energy conference.

He predicted China’s oil demand would peak in the next three to five years.

“In the global [oil] “We need to look at countries like India or other empires to create resilience on the demand side,” Fesharaki added.

Likewise, Wood Mackenzie expects China’s oil demand to peak by 2027, which will be followed by a prolonged decline in crude oil demand.

“China’s oil demand will peak in 2027 and beyond [will turn] to a long-term decline as the country actively pursues the energy transition… and as overall economic growth slows in the longer term,” Shiqing Xia, oil and chemicals consultant at Wood Mackenzie, told CNBC.

Outside China, overall oil demand in India and other emerging markets in Southeast Asia [will] continue to grow until the early 2040s.

Shiqing Xia

Oil and Chemical Consultant, Wood Mackenzie

In 2020, China set a goal of being carbon neutral by 2060 and stated that it would aim for peak carbon emissions by 2030.

Like Fesharaki, Xia expects India to offset China’s demand for crude oil.

India will overtake China as the biggest oil demand growth center by the end of the decade, the research director said.

“Outside China, overall oil demand in India and other emerging economies in Southeast Asia.” [will] “continue to grow until the early 2040s,” she added.

“Over the next two decades, India and Southeast Asia will be Asia’s growth engine,” she predicted.

India’s economy grew 7.8% in the quarter ended June, marking its fastest pace in a year. The country is also widely expected to be the third largest economy by 2030.

According to the International Energy Agency, coal still accounts for the largest share of China’s energy mix at 55%. Petroleum and other liquids make up 19%, while cleaner-burning fuels make up comparatively smaller shares.

“However, natural gas, nuclear and renewable energy consumption has increased steadily since 2001,” the IEA noted in the late 2022 report.

Maybe in a few decades?

Not everyone agrees that China’s oil demand will peak soon. Some analysts believe the time span will be more than a few years – perhaps even decades.

“China has set itself the goal of reducing its net CO2 emissions to zero by 2060. I expect crude oil demand to moderate by then as the country gradually moves towards this target.” [deadline]said Yaw Yan Chong, director of LSEG Oil Research in Asia.

Yaw stressed that China’s crude oil imports are mainly refined into diesel and gasoline, which will become less important in China due to the “pretty explosive” growth in electric vehicle adoption this year. When it comes to electricity generation, he noted that China uses “mostly coal and very little oil.”

Likewise, another analyst believes that without significant technological innovation, China’s oil demand will not come to a halt in the next 20 to 30 years.

“Without major gas discoveries or technological breakthroughs in renewable or alternative energy, we do not expect China’s oil demand growth to end for another two to three decades, although the rate of demand growth may slow,” said Bob McNally, president of Rapidan Energy Group.

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