It is difficult for the oil market to continue relying on China

China's oil demand is forecast to peak, as the country gradually switches to renewable energy and economic growth slows.

"For the past 20 years, the oil market has depended on China. The world's second largest economy is supporting it. However, the above story is about to end," said Chairman of energy consulting firm Facts. Global Energy Fereidun Fesharaki said in a recent energy conference.

He forecasts that China's oil demand will peak in the next 3-5 years. "In the global oil market, we have to look to countries like India, or other economies that have the ability to revive demand," Fesharaki said.

Similarly, consulting firm Wood Mackenzie also forecasts that China's oil demand will peak in 2027. After that, this figure will gradually decrease.

"After 2027, China will see a long-term decline in oil demand, as the country aggressively pursues an energy transition and overall economic growth slows," Shiqing Xia - oil consultant mine at Wood Mackenzie said.

Workers at an oil field in Xinjiang (China). Photo: Reuters

In 2020, China set a goal of neutralizing carbon emissions before 2060. They said carbon emissions will decrease after 2030.

Like Fesharaki, Xia expects India to fill the gap from China. India is forecast to surpass China to become the country with the world's largest oil demand growth rate by the end of this decade.

"Except for China, oil demand in India and other emerging economies in Southeast Asia will continue to grow through 2040. Over the next two decades, the growth driver in Asia will be India and Southeast Asia," she said.

India's economy grew 7.8% in the second quarter - the strongest in a year. The country is also forecast to be the world's third largest economy by 2030.

According to the International Energy Agency (IEA), coal still accounts for the largest proportion of China's energy structure, with 55%. Petroleum and other liquid fuels account for 19%. Clean fuels account for a smaller proportion.

"Nevertheless, consumption of natural gas, nuclear energy and renewable energy has increased gradually since 2001," the IEA said in a report late last year.

However, not everyone agrees that China's oil demand will peak soon. Some analysts believe that this time will last several more years, even decades.

"China aims to neutralize emissions by 2060. I think a few years before that, oil demand will just start to decline," said Yaw Yan Chong - Director of LSEG Oil Research in Asia.

Yaw emphasized that China's crude oil imports are mainly for diesel and gasoline production. These products will become less and less necessary due to the "boom" of electric vehicles. As for the purpose of electricity production, he emphasized that China "mainly uses coal and very little oil".

Bob McNally - president of Rapidan Energy Group said that without a significant breakthrough in renewable energy technology, China will still need oil in the next 20-30 years. However, demand growth will slow down.

Ha Thu (according to CNBC)

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