Oil products demand in China, long the driver of global crude consumption, peaked in 2023 and is forecast to decrease by 1.1 per cent annually between 2023 and 2025, with the drop accelerating in subsequent years, a China oil researcher said on Tuesday.
Declining Chinese oil demand from the growing adoption of liquefied natural gas (LNG) trucks and electric vehicles (EV), as well as China’s slowing economic growth following the COVID-19 pandemic, has been a drag on global oil consumption and prices.
China’s oil products demand shrank 0.5 per cent on year in the first half of this year, mainly led by a 5.8 per cent drop in diesel while gasoline and jet fuel grew 1.6 per cent and 17.6 per cent, respectively, on travel demand, the researcher said at an event, speaking on the condition that their name and affiliation not be used.
“China’s products (demand) already peaked last year,” the researcher said, adding that consumption is set to decline 1.3 per cent in 2024.
Oil products demand was seen slowing further by an average of 2.7 per cent annually from 2025 to 2030, and by 3.2 per cent annually from 2030 to 2035, the researcher added, driven by the transition to cleaner fuels, economic and social changes.
China’s LNG-powered truck fleet reached 730,000 in June and is expected to grow to 850,000 vehicles by the year-end, the researcher said, displacing 280,000 barrels per day (bpd) of diesel in 2024.
Use of LNG to fuel trucks has affected sales of diesel at fuel stations along highways.
LNG-powered models account for 33 per cent of new trucks sold in China currently, with the share rising to as much as half in provinces such as Shanxi and Ningxia, the researcher said.
Gasoline demand in China is expected to peak in 2025, the researcher said, as EV penetration has exceeded the government’s target and is set to reach 40 per cent of new car sales this year with sales expected at 12.2 million units, up 29 per cent from 2023.
Affordable power and technology advances that reduce charging time and increasing driving range are fueling demand for EVs, the researcher added.
China’s jet fuel demand is expected to recover to 83 per cent of 2019 levels by the year-end, the researcher said.
However, jet fuel’s consumption growth is not enough to stem the overall decline in refined products use as it accounts for a much smaller share of demand than diesel and gasoline, they said.
China’s refining capacity growth is slowing as fuel demand falls while refiners switch to petrochemicals, the researcher said.
The country’s crude oil refining capacity is forecast at 19.3 million bpd in 2025, growing slightly to 19.6 million bpd by 2030, the researcher said.
“Coal will peak, oil will peak and even natural gas will peak, but we don’t see petrochemicals peaking (yet) with economic growth and with a 1.4 billion population,” they said.