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China’s Oil Demand Could Peak by the End of the Decade: Can Global Oil Markets Rely on China?

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China’s Oil Demand and its Impact on Global Markets

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China’s Oil Demand and its Future

China’s demand for oil could reach its peak by the end of the decade. The Chairman of Facts Global Energy, Fereidun Fesharaki, stated that the era of China being a major supporter of global oil markets may be coming to an end. He predicted that China’s oil demand will peak in the next three to five years. Wood Mackenzie, an energy consultancy firm, also expects China’s oil demand to peak by 2027, followed by a decline in demand for crude oil.

Shift in Global Oil Markets

With China’s oil demand expected to decline, there is a need to look at other countries like India and emerging economies in Southeast Asia to create resilience in the global oil markets. Wood Mackenzie’s consultant, Shiqing Xia, believes that oil demand in India and Southeast Asia will continue to grow through the early 2040s.

China’s Energy Transition and India’s Role

China aims to be carbon neutral by 2060 and set a target for peak carbon emissions by 2030. As China transitions to cleaner energy sources, India is expected to become the largest oil demand growth center, surpassing China. Asia’s growth engine for the next two decades is projected to be India and Southeast Asia.

India’s Growing Economy and Energy Mix

India’s economy grew by 7.8% in the quarter ending June, making it one of the fastest-growing economies. Coal still dominates China’s energy mix, while petroleum and other liquids account for a smaller share. However, natural gas, nuclear power, and renewable energy consumption have been steadily increasing in China.

Debating China’s Oil Demand Peak

There are differing opinions on when China’s oil demand will peak. Some analysts believe it could take several decades, citing China’s net-zero carbon emission goal by 2060 and the gradual shift towards cleaner energy sources. Others argue that without significant technological advancements, China’s oil demand will continue to grow for the next 20 to 30 years.

Conclusion

While China’s oil demand may be reaching its peak, the global oil markets have the opportunity to rely on other countries like India and Southeast Asia for continued growth. The energy transition and economic developments in these regions will shape the future of oil demand.

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