December 23, 2024

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China Will Remain Key Driver of Oil Demand

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Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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China Will Remain Key Driver of Oil Demand

China will become crucial for global oil demand trends even after growth peaks in the transport sector, according to commodity major Vitol.

The reason for the continued role the country would continue playing in oil demand is petrochemicals, the firm’s head of research said, as quoted by Reuters.

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“The growth just next year is entirely capable of satisfying the total demand globally for plastics,” Giovanni Serio said, speaking at the FT Asia Commodity Summit. “There is no doubt that this is going to be the driving force of oil demand in China and globally because it is less of a decarbonisation story in that space,” he added.

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Earlier this year, the International Energy Agency said that as much as 90% of China’s overall oil demand growth in the period between 2021 and 2024 had come from the petrochemicals segment of the oil and gas industry. At the same time, demand for transport fuels has been slowing due to the accelerated expansion of electric cars in the world’s largest EV market.

Yet even road transport fuel demand is growing in China, according to Vitol’s Serio. He said gasoline demand this year would add some 22,000 bpd, which is a modest number but it is still growth. It would, however, be a sizeable decline in 2023, when gasoline demand rose by 268,000 bpd.

In diesel fuel, LNG trucks are eating into demand but the outlook remains dependent on price differentials since LNG prices are sensitive to international demand fluctuations and winter is the season of peak demand for the superchilled fuel. This has already affected demand, with LNG truck sales in China dipping in September as the price of the fuel rose against diesel.

Over the medium term, it would continue to be petrochemicals driving global oil demand growth, Vitol’s head of research concluded.

By Irina Slav for Oilprice.com

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