China, the world’s largest oil importer, is expected to increase oil demand by around 4% in the first half of next year. The Organization of Petroleum Exporting Countries (OPEC) predicts that China’s oil demand will increase 3.2% in the first half of next year compared to this year to an average of 16.41 million barrels per day. In addition, the International Energy Agency (IEA) predicted that demand will increase by 3.9% next year to an average of 17.1 million barrels per day.
China’s oil consumption has decreased due to strict COVID-19 containment measures between 2020 and 2022, but it is expected to hit a new record high this year. OPEC’s forecast for China’s oil demand growth this year is 7.6% and the IEA’s 12.1%.
In a recent report, OPEC called some predictions that China’s oil demand growth is weakening “exaggerated.” OPEC predicts that China will account for 24.6% of global oil demand growth in the first half of next year.
Consulting firms Wood Mackenzie, Ristad Energy and Energy Spect forecast that China’s oil demand growth will be 3.7%, 4.0%, and 4.4%, respectively, in the first half of next year. Reuters calculated annual growth using IEA data and found that China’s oil demand growth averaged 4.5% from 2016 to 2019 and will be slightly lower next year.
China’s growing oil demand is expected to increase the demand for naphtha and aviation oil, which are widely used as raw materials in the petrochemical sector. Lin Ye, an analyst at Ristad Energy, predicted that demand for naphtha would increase by 11% due to strong demand for petrochemicals, even as margins in Chinese refineries have weakened relatively. In addition, China’s international air traffic is still stagnant at 53% before COVID-19, so demand for aviation oil is expected to grow 28% as there is room for demand to expand.
Wood Mackenzie predicted that gasoline consumption would decline by 1% as electric vehicle supply increased and the travel boom subsided after the end of COVID-19, while Energy Aspect predicted that diesel, which is mainly used in construction equipment, would remain flat as companies reduce new construction.