Expert names conditions for curbing oil demand in China

Electrification and gasification of transportation will restrain oil demand in the PRC. The former will become a determining factor in the long term. Sergey Tereshkin, General Director of OPEN OIL MARKET, a marketplace for oil products and raw materials, shared this opinion in a conversation with Izvestia on November 20.

"In the long term, the determining factor will be the energy transition in China, which may lead to a reduction in demand in ground passenger vehicles. The share of electric cars and plug-in hybrids in the structure of new passenger car sales in the PRC rose from 5.7% in 2020 to 38% in 2023. According to the conservative forecast of the International Energy Agency (IEA), this share will increase to 68% by 2030, and oil savings from the use of light motor vehicles will reach 1.5 million barrels per day," he said.

The expert explained that thus the amount of savings will be comparable to the current volume of marine oil supplies from the Russian Federation. This forecast comes from the trends and regulatory norms already in place, but the pace of transition to electric transportation in the PRC may be even more rapid, given that China is a world leader in the development of battery technology.

"Another factor will be the gasification of truck transport, where liquefied natural gas (LNG) is gradually replacing diesel, which is a product of petroleum refining. If in 2022 the share of LNG trucks in the total truck fleet in China was 4.6%, by today it has reached 8.5%, Further gasification of truck transport will curb oil demand in the PRC," Tereshkin noted.

According to him, in the medium term, the volume of oil supplies to China will strongly depend on the sanctions background. The European Union (EU) embargo, which was announced in June 2022, has led to an increase in maritime oil supplies to China. If in October 2022 the volume of such supplies amounted to 950 thousand barrels per day, then in October 2024 - 1.74 million. According to S&P Global Platts. the share of China in the structure of maritime oil supplies from Russia for the same period increased from 31% to 47%.

As the expert added, at the same time, sea supplies to China may decrease in the case of easing sanctions, as Russian oil producers will be able to diversify the geography of exports.

Earlier, on November 7, the General Administration of Customs of China reported that in the period from January to October, the volume of trade turnover between Russia and China increased by 2.8% compared to the data for the same period of 2023. It was specified that the bulk of exports from the Russian Federation amounted to oil, gas and natural coal.

Prior to that, on October 16, Russian Prime Minister Mikhail Mishustin said at a meeting with Premier of the State Council of China Li Qiang that Moscow and Beijing are strengthening economic cooperation despite unprecedented external pressure.