Era Of High Growth in China's Oil Demand Ends

China is unlikely to return to its oil-intensive growth model this year, with its construction and automotive sectors - the main drivers of oil demand - now looking "exhausted," the risk consultancy said in the report. ". The consultancy expects demand growth to be around 250,000 to 350,000 bpd, less than half the 2019 increment.

Even if China's real estate sector recovers, the consultancy said, it is unlikely that future oil demand growth rates will reach pre-epidemic levels, given lower debt levels, demographics and GDP growth expectations. Eurasia Group said, "The growth model of the global oil industry over the past 20 years, which has been dependent on Chinese demand growth, no longer exists."

The International Energy Agency said in a recent report that India will replace China as the main driver of global oil demand by 2030. China's oil consumption hit a record high of 16.03 million barrels per day last year, with demand growing by 1.2 million barrels per day, as the country took advantage of plunging oil prices to import large quantities of cheap crude, JPMorgan analysts wrote in a recent report. The record figure was also boosted by higher levels of domestic traveler travel in China following the lifting of epidemic restrictions.

However, JPMorgan said the supporting factors that led to last year's record growth in Chinese oil demand are fading in 2024. The bank expects oil demand to increase by just 530,000 bpd this year as China continues on its slowdown trajectory.