China is on track to be the top importer of oil this year after record imports in 2023
Experts are saying China will likely be the top consumer of oil and account for more than a quarter of new oil demand globally this year.
A few minutes every morning is all you need.
Stay up to date on the world's Headlines and Human Stories. It's fun, it's factual, it's fluff-free.
The backstory: China is the world's biggest oil importer and heavily relies on the stuff for its growing economy. Despite efforts to use more electric vehicles (EVs), the country’s demand for oil keeps going up. Even though China's post-COVID economic recovery last year was slow-going, its need for oil remains strong, ready to break previous records. The nation's crude oil imports hit a record high in 2023, rising 11% year on year
More recently: Towards the end of last year, analysts predicted that China’s oil demand growth would slow down in the first half of 2024 to 4%. This is because, even though consumption is getting back to normal in the aviation and petrochemical industries, the property crisis is offsetting some of that with weaker diesel use and a shaky outlook for the construction and manufacturing sectors.
The development: Now, experts are saying China will likely be the top consumer of oil and account for more than a quarter of new oil demand globally this year. The country’s oil demand is expected to jump by around 530,000 barrels a day in 2024, according to a report by Wood Mackenzie. But they do say this is more likely to come in the second half of the year as the economy grows and interest rates lower.
So, what's behind this expected surge? The primary drivers are the aviation industry's reliance on kerosene and the petrochemical sector's demand for specific chemicals crucial in manufacturing products like solar panels and EVs. For instance, the International Energy Agency projects a substantial 13.3% growth in the demand for a key chemical, naphtha, which is distilled from oil, throughout the year.
But China’s oil demand is expected to peak before 2027, then fall rapidly, mostly driven by the rise of EVs contributing to the country’s green transition.
Key comments:
"The main downside risk to oil demand could come from diesel demand during the off-season in Q1 2024," said Shiqing Xia, an oil and chemicals consultant at Wood Mackenzie.
“Much of the growth [in oil demand] will be coming in the second half of the year,” Alan Gelder, senior vice president of research at Wood Mackenzie, said in the report. “This will be fuelled by improving economic growth and lower interest rates.”
Comments ()