Peak oil: China’s crude demand set to fall as EV bets ease Hormuz fears
China now faces challenge of too much refining capacity as electric vehicles, especially trucks, slash demand, CNPC officials say
China’s crude oil demand is expected to peak this year, according to executives from the country’s largest oil firm, a scenario set to further reshape the global energy market following the Strait of Hormuz crisis.
The world’s top oil importer would record slowing demand as reductions in the use of transport fuel outweighed gains in petrochemical demand, said Zhang Changbao, vice-president of China National Petroleum Corporation (CNPC) Asia-Pacific (Hong Kong), at an event in Hong Kong on Monday. CNPC is the parent company of PetroChina.
The shift was due to Beijing’s massive efforts to develop renewable energy while also revamping the country’s transport sector by becoming the world’s largest producer and user of electric vehicles, Zhang said.
China now faced a different challenge at home: persistent refining overcapacity, said Dai Jiaquan, chief economist of the CNPC Economics and Technology Research Institute. Domestic crude demand was estimated at 750 million to 800 million tonnes per year, compared with refining capacity of 900 million to 1 billion tonnes, he estimated.
Disruptions in the Strait of Hormuz had reshaped global supply and demand this year, pushing the market from an expected surplus into a supply deficit.
“Domestic refining capacity is undoubtedly excessive,” he said.