China’s ever-increasing demand for oil, which has played a pivotal role in global oil markets for two decades, may be nearing its peak, according to some energy analysts. Fereidun Fesharaki, Chairman of Facts Global Energy, believes that China’s oil demand could plateau within the next three to five years. Similarly, Wood Mackenzie predicts that China’s oil consumption will peak by 2027, followed by a sustained decline as the nation intensifies its pursuit of an energy transition and faces slower economic growth in the long term.
China’s commitment to carbon neutrality by 2060, along with striving for peak carbon emissions by 2030, is driving these expectations of reduced oil demand. In light of this, many experts are now turning their attention to India as the next growth center for oil demand. India is poised to surpass China as the largest contributor to oil demand growth by the end of the decade, making it a crucial player in global oil markets.
Shiqing Xia, an oil and chemicals consultant at Wood Mackenzie, emphasizes that beyond China, other emerging economies in Southeast Asia are also expected to drive oil demand growth well into the 2040s. India, in particular, is anticipated to become the primary engine of growth in Asia for the next two decades. With a recent 7.8% increase in its GDP in the second quarter of the year and projections of becoming the third-largest economy by 2030, India’s economic expansion is a significant factor in this shifting dynamic.
However, not all experts share the view that China’s oil demand is on the brink of peaking. Some believe the timeline may extend for several decades. Yaw Yan Chong, director of LSEG Oil Research in Asia, points out that China’s commitment to achieving net-zero carbon emissions by 2060 means that its crude oil demand will gradually ease in the run-up to that deadline. This easing could be driven by the rapid adoption of electric vehicles (EVs) and a decrease in the necessity for diesel and gasoline, which constitute a considerable portion of China’s crude oil imports.
Bob McNally, president of Rapidan Energy Group, adds that, barring substantial technological advancements or major gas discoveries, China’s oil demand is unlikely to cease for another two to three decades, although the rate of demand growth may slow down over time.
The diverse range of opinions highlights the complex and evolving nature of China’s role in global oil markets, with both short-term and long-term factors at play. As China navigates its energy transition, the world watches closely to see how these changes will shape the future of global energy dynamics.