The country that’s driven global oil demand since the turn of the century may hit the brakes sooner than expected as travelers shift toward electric cars or even forgo the open road in favor of trains.
China’s oil consumption will peak in 2025, five to eight years earlier than market consensus, according to Morgan Stanley analysts including Andy Meng.
The reversal will be driven by a transportation model unique to China: While most countries moving up the economic ladder show continued growth in oil demand from increased driving, mass-
adoption of electric vehicles and high- speed rail in China will drastically reduce gasoline use, the bank said.
If the theory plays out, it could signal a huge shift for the oil market, which has relied on China for more than a third of global demand growth since 1999. An expanding body of research is painting a bleak future for oil, as rapid adoption of electric vehicles could mean global demand peaks by the 2030s, a prospect that’s likely to worry energy executives and investors.
Some of the industry’s top prognosticators expect the country’s oil demand to keep growing for years, albeit at a slower pace. The International Energy Agency sees China crude consumption expanding through 2040, while the nation’s largest energy producer China National Petroleum Corp. has forecast that gasoline use will peak five years before oil demand does in 2030. MDT/Bloomberg