China is the country in the world with the most cars (it is estimated that there are more than 415 million cars). In addition, the ‘Asian giant’ is the largest oil importer in the world. With this description, it is not surprising that China has become the great driver of oil demand worldwide in the last two decades, keeping the price of crude oil at relatively high levels, even in crises like that of 2008. However, , this same country that has given ‘wings’ to oil is now going to be the same one that cuts them off. The electrification of China is already an unstoppable trend and is reaching a turning point that could mark the future of the price of oil. But the most curious thing of all is that once again China has ahead of all forecasts. This economy continues to present levels of prosperity and per capita income of a developing economy, but, however, it presents some features of a highly developed economy, which makes it a ‘rara avis’. Demographics are a good example, but peak oil consumption is no less so. “There is no other developing country in a similar situation,” they say from S&P Global.
The energy transformation in China, the world’s second largest economy, continues to redefine the global oil landscape. According to a recent report from China National Petroleum (CNPC), the Asian giant’s oil demand could peak in 2025, five years earlier than expected. This advance, driven by the transition towards renewable energy vehicles and cleaner fuels such as liquefied natural gas, signals a tectonic shift in the country’s energy consumption dynamics, according to the agency. Bloomberg.
The report projects that Oil demand will reach 770 million tons in 2025, then begin a gradual decline to reach 240 million tons in 2060. These figures contrast with previous estimates, which placed peak demand in 2030. This change in projections reflects not only rapid technological advancement and environmental policies, but also the economic difficulties that have weighed on the oil market this year.
Mass adoption of the electric car
The decline in the consumption of traditional fuels, such as diesel and gasoline, is being accelerated by the mass adoption of electric vehicles and the increasing use of natural gas in freight transportation. In fact, Diesel demand peaked in 2019while gasoline did so last year, according to Wu Mouyuan, vice president of the Economic and Technological Research Institute of CNPC.
At a recent forum, Wang Lining, director of oil market research at the institute, said oil demand in 2024 will remain broadly stable at 756 million tons. Furthermore, he predicted that refining capacity in the country will peak in 2028, marking another milestone in China’s energy transformation.
Beyond oil, the CNPC report offers a comprehensive view of China’s future energy trends. Domestic crude oil production is expected to remain at 200 million tons per year (about 4 million barrels per day) until 2035, underscoring the country’s priority in guaranteeing its energy security. On the other hand, natural gas production could reach 310 billion cubic meters in 2035, before declining slightly towards 2060.
Electrification, driven by the rise of renewable energies, will be another fundamental pillar in the energy change. According to the report, the participation of electricity in the energy matrix of China will increase by 1.3 percentage points each year, until it represents 63% of the mix by 2060. This advance, combined with the adoption of clean technologies, will allow primary energy demand to peak in 2035, equivalent to 7 billion tons of standard coal, and then decline to 6.4 billion in 2060.
This shift towards a more sustainable model has profound implications not only for China, but also for the global crude oil market. For decades, China has been the main driver of global oil demand growth. China imports around 11.3 million barrels of oil per dayan amount, for example, that is equivalent to the daily consumption of five ‘Españas’. However, this advance in peak consumption reconfigures expectations and puts traditional crude oil exporters in check.
The transition also reveals a shift in Beijing’s priorities. The commitment to less dependence on fossil fuels, combined with the development of renewable technologies, positions China as a leader in the race towards sustainability. However, this ambitious plan is not without challenges, including ensuring a stable and affordable energy supply while accelerating the transition to a cleaner future.
“With total oil demand three times that of India, the world’s third largest oil consumerChina is the only major developing country likely to see demand for gasoline and diesel/diesel stagnate currently or in the near future“said Kang Wu, global director of oil demand research at S&P Global Commodity Insights. “Although oil demand in almost all developed countries has peaked, the vast majority of developing countries, except China, They will see their demand for oil continue to grow for the foreseeable future. Therefore, China is a decisive force in determining if and when global oil demand will peak,” Wu adds.
In a global context where decarbonization is increasingly urgent, China’s leadership could usher in a new energy era. As the country adjusts its strategies and redefines its goals, the world will be attentive to the impact of this change on the international energy balance.
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