March 2, 2024 [Oil Price]- Demand for petroleum products in China could peak before next year, the research unit of the China National Petroleum Corporation has forecast.
The projection is based on expectations that the energy transition will continue gathering speed, eliminating oil product demand growth.
“With new productive forces — which refer to technological innovation, data, smart or intelligent technologies and the like — driving an overall increase in productivity and enhancing new dynamics for economic growth, overall demand for petroleum is on an upward trajectory this year,” the head of the oil market research division of the CNPC’s Economics and Technology Research Institute said, as quoted by China Daily.
The research entity has also forecast that China’s oil demand will start declining in the 2030s as demand for oil as fuel dwindles under the onslaught of electric vehicles, for which China is the biggest market globally.
Per CNPC’s researchers, oil-derived fuels will remain the most used until 2035, but demand will begin declining from around 2030. Driven by this trend, China’s total oil demand will fall to 650 million tons in 2035.
Electric cars appear to be the main factor that CNPC’s researchers see as determining the future of oil demand but EV sales growth in China has started declining. After years of strong growth, the market is giving signs it is nearing the point of saturation, driving Chinese carmakers to eye international expansion as their new means of profit growth. At home, this weakening demand prompted massive price wars that also involved foreign players in the Chinese EV market, such as Tesla and VW.
Meanwhile, despite this explosive growth in EV sales, demand for oil in China last year broke yet another record, reaching 756 million tons, per the CNPC research arm again, noting this was an 11.5% increase on the year. Petroleum product demand also surged, by 9.5% from 2022 to 399 million tons.
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