Oil demand in China has been a topic of interest this year, as the country’s transition to electric vehicles and natural gas has led to a considerable slowdown in demand. According to an analysis by Goldman Sachs, China’s oil demand growth is expected to slow by 0.2 million barrels per day in the first half of the year compared to the same period in 2023. Additionally, there is a projected drop in demand during the summer period, indicating a significant shift in the country’s energy consumption patterns.
One of the key factors contributing to the slowdown in oil demand is the shift from gasoline cars to electric and hybrid vehicles in China. This transition has led to a reduction in oil demand by 0.5 million barrels per day, highlighting the rapid growth of the electric vehicle sector in the country. In fact, three of China’s biggest electric car makers achieved record sales in June, signaling a strong market for electric vehicles in the country.
Chinese electric vehicle companies are also making significant strides in innovation, with some even surpassing Tesla in terms of technological advancements. This growth in the electric vehicle sector is expected to have a long-term impact on oil demand, with Goldman analysts estimating that the use of petroleum products for road transport in China will peak in 2025, years ahead of other emerging market economies.
The slowdown in oil demand also sheds light on China’s dependence on production, with analysts noting that the country’s overcapacity highlights the fragility of its production bet. While the shift towards electric vehicles does not directly impact China’s GDP, it does raise concerns about the country’s economic stability and reliance on traditional energy sources.
This slowdown in oil demand comes at a time when China is facing a general economic slowdown, a struggling real estate sector, and a sense of consumer distrust. Recent actions, such as the country’s two stock exchanges stopping daily reporting on foreign investor financial flows, indicate a broader effort to reduce real-time data reporting as China grapples with economic challenges.
Overall, the slowdown in oil demand in China reflects a larger trend towards sustainable energy sources and technological innovation in the country. As China continues to prioritize electric vehicles and natural gas over traditional oil consumption, the global energy landscape is likely to undergo significant changes in the coming years.