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Analyzing China's Oil Demand Outlook For 2024
3 months ago
Energy & Petroleum
Energy & Petroleum

Analyzing China's Oil Demand Outlook For 2024

Delve into the intricate dynamics of China's oil demand in 2024. Despite economic pressures, the petrochemical sector's resilience and optimism in aviation paint a nuanced picture. Uncover the challenges and opportunities shaping China's pivotal role in the global oil market.

In the intricate landscape of global oil dynamics, China emerges as a pivotal player, with its oil demand forecasted to undergo notable shifts in the first half of 2024. Let’s delve into the nuanced predictions offered by esteemed consultancies, exploring the factors influencing China’s oil consumption and the potential implications for the broader market.

Current Scenario

As we navigate the post-COVID era, China, the world’s largest oil importer, faces a complex landscape. The Organization of Petroleum Exporting Countries (OPEC) anticipates a 3.2% increase in Chinese demand, reaching 16.41 million barrels per day (bpd) in the first half of 2024. Meanwhile, the International Energy Agency (IEA) projects a 3.9% growth, culminating in an average demand of 17.1 million bpd for 2023.

Economic Landscape & Oil Consumption

China’s economic recovery, albeit gradual, has not deterred the anticipation of record-high oil consumption. Despite stringent COVID-19 curbs between 2020 and 2022, OPEC and the IEA forecast growth rates of 7.6% and 12.1%, respectively, in 2023, showcasing the resilience of China’s oil appetite.

Oil Demand Drivers

Here are the details

  • Naphtha & Petrochemicals: The petrochemical sector, driven by robust demand for naphtha, emerges as a key driver. Rystad Energy’s Lin Ye forecasts an 11% growth in China’s first-half naphtha demand, highlighting the sector’s resilience despite marginal profit margins.
  • Jet Fuel Demand: Post-COVID recovery in international air travel fuels optimism for increased jet fuel demand. Rystad projects a substantial 28% growth in the first half of 2024 compared to 2023.

Economic Pressures & Potential Setbacks

While these positive projections buoy certain sectors, broader economic pressures pose challenges. A 0.8-1% drop is anticipated in first-half gasoline consumption, influenced by the rise of electric vehicles and a gradual easing of post-COVID travel demand.

Impact On Construction & Manufacturing

China’s construction sector, a significant diesel consumer, experienced a 15.2% decline in new construction in September 2023. The manufacturing sector, another major diesel user, grapples with weak export demand and the repercussions of the ongoing property slowdown.

OFB’s Insight

In the intricate realm of China’s oil demand, projections for 2024 showcase a dynamic landscape. While certain sectors like Petrochemicals and International air travel exhibit resilience, challenges persist in the form of economic pressures, shifting travel patterns, and uncertainties in the global oil market.

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